Oakland Raiders v. City of Berkeley

• Decision Date: 29 November 1976
• Citation: 65 Cal.App.3d 623,137 Cal.Rptr. 648
• Court: California Court of Appeals Court of Appeals
• Parties: The OAKLAND RAIDERS, a limited partnership, Plaintiff and Respondent, v. The CITY OF BERKELEY, a Municipal Corporation, Defendant and Appellant. Civ. 37812.

Page 648

137 Cal.Rptr. 648

65 Cal.App.3d 623

The OAKLAND RAIDERS, a limited partnership, Plaintiff and Respondent, v. The CITY OF BERKELEY, a Municipal Corporation, Defendant and Appellant.

Civ. 37812.

Court of Appeal, First District, Division 4, California.

Nov. 29, 1976.

As Modified on Denial of Rehearing Dec. 28, 1976.

Hearing Denied Jan. 27, 1977.

Lois L. Johnson, City Atty., Susan Watkins, Asst. City Atty., Michael S. Lawson, Berkeley, for defendant and appellant.

Ralph A. Lombardi, Hardin, Cook, Loper, Engel & Bergez, Oakland, for plaintiff and respondent.

CHRISTIAN, Associate Justice.

The City of Berkeley appeals from a summary judgment, obtained by respondent Oakland Raiders, enjoining appellant from collecting a tax imposed by the city's ordinance no. 4703--N.S. We reverse the judgment.

On June 30, 1972, respondent and the Regents of the University of California entered into a stadium rental agreement by which respondent leased the use of California Memorial Stadium at the University of California, Berkeley, for several professional football games to be played during the years 1972, 1973, and 1974.

On July 9, 1974, appellant adopted ordinance no. 4703--N.S. ('Professional Sports Events License Tax') to amend ordinance no. 2805--N.S. ('Business License Tax'). Ordinance no. 4703--N.S. provided that 'professional sports events' would be subject to an annual license tax of 10 percent of gross receipts. The ordinance was passed as an urgency measure, for the purpose of making it immediately effective. The preexisting business license tax ordinance (no. 2805--N.S.) imposed on all businesses in the City of Berkeley a tax to be determined variously by the number of employees, the gross receipts of the business, receive scholarships, grants-in-aid or similar financial was calculated by reference to gross receipts, the tax rate was established as .4 percent of gross receipts; the only exception to this provision in ordinance no. 2805--N.S. was established by the ordinance here under review, with application only to professional sporting events.

Respondent asserts that the new ordinance ¹ is a regulatory rather than a revenue-raising measure and that, as applied, it is an improper regulation of the property held in public trust by the Regents of the University of California. A city is permitted to make local ordinances and regulations which are not in conflict with general laws. (Cal.Const. art. XI, § 7.) However, a city may not enact ordinances which conflict with general laws on statewide matters (Hall v. City of Taft (1956) 47 Cal.2d 177, 184, 302 P.2d 574); the Regents of the University of California are vested by the Constitution with the legal title and management of property of the University of California and have the unrestricted power to take and hold real and personal property for the benefit of the university. (Cal.Const., art. IX, § 9, subd. (f).) Thus, the University of California is not subject to local regulations with regard to its use or management of the property held by the Regents in public trust. (See Hall v. City of Taft, supra, at pp. 182--183, 302 P.2d 574.)

Nonetheless, 'Whether or not the state law has occupied the field of regulation, cities may tax businesses carried on within their boundaries and enforce such taxes by requiring business licenses for revenue and by criminal penalties.' (In re Groves (1960) 54 Cal.2d 154, 156, 4 Cal.Rptr. 844, 846, 351 P.2d 1028, 1030.) A tax upon the operation of a business by a lessee of publicly owned property constitutes a tax upon the privilege of performing the business rather than a tax upon the property. (Brunton v. Superior Court (1942) 20 Cal.2d 202, 206--207, 124 P.2d 831.) 'And, where it merely appears that one operating under a government contract or lease is subjected to a tax with respect to his profits on the same basis as others who are engaged in similar businesses, there is no sufficient ground for holding that the effect upon the government is other than indirect and remote. . . .' (Helvering v. Producers Corp. (1938) 303 U.S. 376, 386--387, 58 S.Ct. 623, 628, 82 L.Ed. 907); the fact that a tax may constitute an indirect burden upon an organ of government does not invalidate the tax. (5 Witkin, Summary of California Law (8th ed. 1974) Taxation, § 11, p. 3995.)

In determining whether a municipal ordinance is a revenue or a regulatory measure, the courts will look to the substantive provisions of the ordinance. (Arnke v. City of Berkeley (1960) 185 Cal.App.2d 842, 847, 8 Cal.Rptr. 645 (upholding ordinance no. 2805--N.S. as a revenue measure).) Ordinance no. 4703--N.S. which amends ordinance no. 2805--N.S., contains no provision which would regulate the conduct of anyone who is subject to the ordinance; it only establishes a tax. Where the statute contains no regulatory provisions, but only provides for the subjects and amounts of taxation, 'it is very clear that the license tax upon the business alleged to be conducted . . . was imposed solely for the purpose of raising revenue.' (Ex parte Braun (1903) 141 Cal. 204, 206, 74 P. 780, 781; In re Johnson (1920) 47 Cal.App. 465, 466--467, 190 P. 852.) As noted in Child Labor Tax Case (1922) 259 U.S. 20, 38, 42 S.Ct. 449, 451, 66 L.Ed. 817: 'Taxes are occasionally imposed in the discretion of the Legislature on proper subjects with the primary motive of obtaining revenue from them and with the incidental motive of discouraging them by making their continuance onerous. They do not lose their character as taxes because of the incidental motive. But there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty, with the characteristics of regulation and punishment.' In that case, the United States Supreme Court analyzed the provisions of the statute and, noting that the provisions included numerous regulatory features, held the 'tax' to be in fact a regulation. A reading of ordinance no. 2805--N.S. as amended by ordinance no. 4703--N.S. establishes that the only provision in the entire ordinance which could possibly be asserted to be a regulation would be the requirement of a license. However, the only purpose of the license requirement is to assure that the tax has in fact been paid; thus, the tax does not present a facade behind which a regulatory scheme has been hidden. (Arnke v. City of Berkeley, supra, 185 Cal.App.2d 842, 8 Cal.Rptr. 645.)

Moreover, the mere fact that a tax has a collateral effect of regulating an activity does not make that tax any less a revenue-raising measure. 'Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed. But a tax is not any the less a tax because it has a regulatory effect, . . .' (Sonzinsky v. United States (1937) 300 U.S. 506, 513, 57 S.Ct. 554, 555, 81 L.Ed. 772; accord United States v. Sanchez (1950) 340 U.S. 42, 45, 71 S.Ct. 108, 95 L.Ed. 47; Magnano Co. v. Hamilton (1934) 292 U.S. 40, 44, 54 S.Ct. 599, 78 L.Ed. 1109.) Furthermore, the motives of the legislative body exercising the taxing power are beyond the inquiry of the courts. (United States v. Sanchez, supra, 370 U.S. at p. 45, 71 S.Ct. 108; Sonzinsky v. United...