Ardon v. City of Los Angeles

• Decision Date: 25 July 2011
• Docket Number: No. S174507.,S174507.
• Citation: Ardon v. City of Los Angeles, 52 Cal.4th 241, 255 P.3d 958, 128 Cal.Rptr.3d 283 (Cal. 2011)
• Court: California Supreme Court
• Parties: Estuardo ARDON, Plaintiff and Appellant,v.CITY OF LOS ANGELES, Defendant and Respondent.

52 Cal.4th 241

255 P.3d 958

128 Cal.Rptr.3d 283

11 Cal. Daily Op. Serv. 9310

11 Cal. Daily Op. Serv. 11,127

Estuardo ARDON, Plaintiff and Appellant,

v.CITY OF LOS ANGELES, Defendant and Respondent.

No. S174507.

Supreme Court of California

July 25, 2011.

OPINION TEXT STARTS HERE Wolf Haldenstein Adler Freeman & Herz, San Diego, Francis M. Gregorek, Rachele R. Rickert; Cuneo Gilbert & LaDuca, Los Angeles, Jon Tostrud; Chimicles & Tikellis, Nicholas E. Chimicles and Timothy N. Mathews for Plaintiff and Appellant.Wolf, Haldenstein Adler Freeman & Herz, San Diego, Francis M. Gregorek, Rachele R. Rickert; Cuneo Gilbert & LaDuca, Los Angeles, Jon Tostrud; Chimicles & Tikellis and Timothy N. Mathews for Willy Granados and Jon W. McWilliams as Amici Curiae on behalf of Plaintiff and Appellant.Patricia Sturdevant; Wilentz, Goldman & Spitzer, Kevin P. Roddy; and Timothy Bittle, Sacramento, for NASCAT, Howard Jarvis Taxpayers Association, Consumer Federation of California and Utility Reform Network as Amici Curiae on behalf of Plaintiff and Appellant.Patricia Sturdevant; Richard Holober; Shepherd, Finkelman, Miller & Shah, Patrick A. Klingman; Huskinson, Brown, Heidenreich & Carlin and Paul E. Heidenreich, Manhattan Beach, for Consumer Action, Consumer Federation of California and NASCAT as Amici Curiae on behalf of Plaintiff and Appellant.Edward M. Teyssier; and Joseph D. Henchman for the Tax Foundation as Amicus Curiae on behalf of Plaintiff and Appellant.Alan M. Mansfield for Utility Consumers' Action Network as Amicus Curiae on behalf of Plaintiff and Appellant.Rockard J. Delgadillo and Carmen Trutanich, City Attorneys, Noreen S. Vincent and Michael Nagle, Assistant City Attorneys, Brian I. Cheng, Deputy City Attorney; Orrick Herrington & Sutcliffe, Los Angeles, William Molinski, Valerie M. Goo and Frank D. Rorie; Colantuono & Levin, Los Angeles, Michael G. Colantuono, Sandra J. Levin, Amy C. Sparrow and Erwin M. Benedicto for Defendant Respondent.Dennis J. Herrera, City Attorney (San Francisco), Julie Van Nostern, Chief Tax Attorney, and Peter J. Keith, Deputy City Attorney, for The League of California Cities, The California State Association of Counties and The California Special Districts Association as Amici Curiae on behalf of Defendant and Respondent.Raymond G. Fortner, Jr., County Counsel (Los Angeles) and Albert Ramseyer, Principal Deputy County Counsel, for the County of Los Angeles as Amicus Curiae on behalf of Defendant and Respondent.CHIN, J.

[52 Cal.4th 245 , 255 P.3d 960]

In this case, we must decide whether Government Code section 910 (section 910) ¹ allows taxpayers to file a class action claim against a municipal governmental entity for the refund of local taxes. In City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455, 115 Cal.Rptr. 797, 525 P.2d 701 ( City of San Jose ), we held that section 910 permits a litigant to bring a class claim against a local government. We later held in Woosley v. State of California (1992) 3 Cal.4th 758, 792, 13 Cal.Rptr.2d 30, 838 P.2d 758 ( Woosley ), however, that class claims to recover tax refunds are not permitted in certain situations because article XIII, section 32 of the California Constitution prevents the judiciary “from expanding the methods for seeking tax refunds expressly provided by the Legislature.” As we explain, neither Woosley, which concerned the interpretation of statutes other than section 910, nor article XIII, section 32 of the California Constitution, applies to our determination of whether section 910 permits class claims that seek the refund of local taxes. We therefore conclude that the reasoning of City of San Jose, which permitted a class claim against a municipal government in the context of an action for nuisance under section 910, also permits taxpayers to file a class claim seeking the refund of local taxes under the same statute.

FACTS AND PROCEDURAL BACKGROUND

Plaintiff Estuardo Ardon (Ardon) is a resident of defendant City of Los Angeles (City). In October 2006, Ardon filed a class action lawsuit on behalf of himself and similarly situated individuals challenging the City's telephone users tax (TUT) and seeking refund of funds collected under the TUT over the previous two years. Ardon asserted that the City's municipal code exempts all amounts paid for telephone service from the TUT to the extent that those amounts are also exempt from the federal excise tax (FET). Ardon contends that since the FET was improperly collected, so too was the TUT. In December 2006, Ardon received a notice from the Los Angeles City Attorney rejecting his attempt to present a tax refund claim on behalf of a class due to lack of legal standing.

Ardon's complaint against the City sought, inter alia, injunctive and declaratory relief to prevent continued unlawful collection of the TUT, declaratory relief alleging the unconstitutional amendment of the TUT by the Los Angeles City Council,² money had and received in unjust enrichment, and violation of the due process clauses of the Fourteenth and Fifth Amendments to the United States Constitution. The complaint sought certain remedies, including certification as a class action, an accounting of the TUT funds collected by the City, and return of money wrongfully taxed.

The City demurred to Ardon's complaint and moved to strike all class action allegations on the grounds that Woosley prohibited Ardon from filing a claim against the City for the refund of taxes on behalf of a putative class. Instead, the City argued, each member of the alleged class must file a government claim with the City before Ardon could proceed with a class action lawsuit. The superior court granted the City's motion to strike all class allegations. It also partially overruled and partially sustained the demurrer without leave to amend, and stayed other causes of action. Ardon filed a timely appeal from the interlocutory order striking the class allegations.

A divided Court of Appeal affirmed the trial court's order refusing to certify the class. In so doing, the panel specifically rejected its own reasoning and contrary holding in a factually similar case, County of Los Angeles v. Superior Court (2008) 159 Cal.App.4th 353, 71 Cal.Rptr.3d 485 ( Oronoz ). The Court of Appeal dissent would have followed the opinion in Oronoz, which held that under City of San Jose's construction of section 910, a “claimant” could be an entire class as well as an individual. ( Oronoz, supra, at p. 367, 71 Cal.Rptr.3d 485.) We granted review to resolve the conflict in the appellate courts regarding permissible class claims under section 910.

DISCUSSION

Before 1959, taxpayer and other claims against the state, local, and municipal governments were governed by myriad state statutes and local ordinances. Finding this system too complex, the Legislature enacted the Government Claims Act (the Act), which established a standardized procedure for bringing claims against local governmental entities. (Stats.1959, ch. 1724, p. 4133, enacting former Gov.Code, § 700 et seq. [replacing more than 150 separate procedures for directing claims against local governmental entities]; now § 900 et seq.) ³

Section 910 does not specifically apply to tax refunds, but to all claims against governmental entities. (See City of San Jose, supra, 12 Cal.3d at p. 454, 115 Cal.Rptr. 797, 525 P.2d 701.) The purpose of the claims statutes “is to provide the public entity sufficient information to enable it to adequately investigate claims and to settle them, if appropriate, without the expense of litigation.” ( Id. at p. 455, 115 Cal.Rptr. 797, 525 P.2d 701.) As originally proposed, the standardized procedures of the Act embodied in section 910 would not have applied to “[c]laims under the Revenue and Taxation Code or other provisions of law prescribing procedures for the refund ... of any tax....” (Recommendation and Study Relating to the Presentation of Claims Against Public Entities (Jan. 1959) 2 Cal. Law Revision Com. Rep. (1959) p. A–12 (proposed former § 703, subd. (a), italics added).) However, the Legislature specifically rejected this proposal and instead enacted former section 703, subdivision (a) (now § 905, subd. (a)), which exempted from section 910 “[c]laims under the Revenue and Taxation Code or other statute prescribing procedures for the refund ... of any tax....” (Stats.1959, ch. 1724, pp. 4133–4134, italics added.)

The issue in City of San Jose was whether a class claim could satisfy the claim requirements of section 910, or whether such class action claims could not be maintained against governmental entities. ( City of San Jose, supra, 12 Cal.3d at p. 455, 115 Cal.Rptr. 797, 525 P.2d 701.) The plaintiffs had filed a class claim against the City of San Jose under section 910, alleging that aircraft noise, dust, vapors, and vibration arising from operations at the San Jose Municipal Airport were a nuisance and diminished the market value of their property. ( City of San Jose, at pp. 453, 455, 115 Cal.Rptr. 797, 525 P.2d 701.) This court adopted a two-part test for determining whether the claim satisfied section 910: “Is there some compliance with all of the statutory requirements; and, if so, is this compliance sufficient to constitute substantial compliance?” ( City of San Jose, at pp. 456–457, 115 Cal.Rptr. 797, 525 P.2d 701.)

In addressing the section 910 class claim, City of San Jose concluded that the word “claimant” referred to “the class itself,” not to an individual class member. The court “reject[ed] the suggested necessity for filing an individual claim for each member of the purported class.” ( City of San Jose, supra, 12 Cal.3d at p. 457, 115 Cal.Rptr. 797, 525 P.2d 701.) The court reasoned that “[t]o require such detailed information in advance of the complaint would severely restrict the maintenance of appropriate class actions—contrary to recognized policy favoring them.” ( Ibid.; see Code Civ. Proc., § 382; see also Vasquez v. Superior Court (1971...