Justia California Court of Appeals Opinion Summaries

This appeal stemmed from a dispute between the parties as to how the County may tax Time Warner's possessory interests in using public rights-of-way. The trial court found that the Assessor may tax the possessory interests only on the franchise fee because anyone can obtain an identical franchise for five percent of television revenue.The Court of Appeal held that there was no legal restriction on the County valuing the possessory interests in providing television, broadband, and telephone services. The court agreed with the trial court that the Assessor's valuation was not supported by substantial evidence; that the County erred in taxing the entire five percent of revenue rather than the value of the possessory interests alone; and that substantial evidence supported the Los Angeles County Assessment Appeals Board's finding that the reasonably anticipated term of possession of Time Warner's rights-of-way was 10 years. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Time Warner Cable Inc. v. County of Los Angeles" on Justia Law

Certain limited liability companies (LLCs) paid a levy under Revenue and Taxation Code section 17942, which was later determined by the court of appeal to be unconstitutional. After two separate actions seeking class treatment for the payment of refund claims were coordinated, the trial court rejected a jurisdictional argument from the Franchise Tax Board (FTB) that the LLCs had failed to adequately exhaust their administrative remedies as a class and could not proceed on a classwide basis. The court, however, went on to deny the motion for class certification on multiple other grounds, including lack of ascertainability, numerosity, predominance, and superiority. The court of appeal reversed. The court agreed with the trial court’s exhaustion determination but concluded that its class certification analysis was fundamentally flawed. The court deemed the matter “eminently suitable for treatment on a classwide basis.” There is no bar to certification of a class action for refund of unconstitutional taxes so long as all class members have filed their own individual claims and thereby exhausted their administrative remedies; no purpose would be served by erecting a jurisdictional barrier to class treatment of those claims on the formalistic ground that no class claim for refund was filed. View "Franchise Tax Board Limited Liability Corp. Tax Refund Cases" on Justia Law

Littlejohn sought to sue Costco, the California Board of Equalization, and Abbott to recover sales tax on purchases of Abbott’s product Ensure. Littlejohn alleged that Ensure is properly categorized as a food; no sales tax was actually due on his purchases; Costco was under no obligation to pay and should not have paid sales tax on its sales of Ensure. The complaint alleged that during the period in question Ensure was classified as a food product exempt from sales tax, not a nutritional supplement. Littlejohn based his claim on a 1974 California Supreme Court decision, Javor. The trial court concluded that the judicially noticed documents in the record showed the Board had not resolved the question of whether Ensure was nontaxable during the relevant period.. The court held that the documents were entitled to deference, but did not have the same force of law as Board regulations and were not binding. The court of appeal affirmed, reasoning that the case does not involve allegations of unique circumstances showing the Board has concluded consumers are owed refunds for taxes paid on sales of Ensure. A Javor remedy should be limited to the unique circumstances where the plaintiff shows that the state has been unjustly enriched by the overpayment of sales tax, and the Board concurs that the circumstances warrant refunds. View "Littlejohn v. Costco Wholesale Corp." on Justia Law

Plaintiffs Yvonne Reid and Serena Wong sued defendants the City of San Diego (City) and the San Diego Tourism Marketing District (TMD) in a putative class action complaint, challenging what they allege is "an illegal hotel tax." The trial court sustained Defendants' demurrer without leave to amend on statute of limitations and other grounds. The Court of Appeal affirmed, concluding some of the causes of action were time-barred and the remainder failed to state facts constituting a cause of action. View "Reid v. City of San Diego" on Justia Law

Petitioner Alysia Webb filed a verified petition for mandamus relief with the superior court, alleging the City of Riverside (Riverside) violated Propositions 26 and 218 when it began transferring additional revenue from electric utility reserve fund accounts into the general fund without approval by the electorate. Webb contended the court improperly dismissed her case without leave to amend on a demurrer because the 120-day statute of limitations arising under Public Utilities Code section 10004.52 did not apply to her challenge of Riverside's change in calculation of its electric general fund transfer. She further argued the fund transfers constituted a tax increase because they altered the methodology used to calculate the amount of money Riverside transfers from the electric utility reserve to the general fund. After review, the Court of Appeal disagreed and affirmed the superior court. View "Webb v. City of Riverside" on Justia Law

Plaintiff 1901 First Street Owner, LLC (First Street), appealed a judgment which interpreted the meaning and application of Government Code section 65995 (b)(1), in a manner favorable to defendant Tustin Unified School District (the District). First Street developed an apartment complex. The underlying dispute arose after the City of Santa Ana (the City) had calculated the square footage of the development for purposes of assessing a school impact fee. The District disputed the City’s method of calculating the assessable space and filed an administrative appeal. Before that appeal was resolved, the City revised its calculation in the District’s favor, prompting First Street to file an administrative appeal. First Street prevailed in its administrative appeal and subsequently filed the present lawsuit against the District, alleging various tort causes of action and seeking declaratory relief and a writ of mandate ordering the District to refund the excess school fees. The court dismissed the tort claims pursuant to an anti-SLAPP motion, which the Court of Appeal affirmed in a separate appeal. The case proceeded on the declaratory relief claim and writ petition, as well as a cross-complaint by the District for an administrative writ of mandate. The court found in favor of the District, and First Street appealed. At issue was whether the square footage of interior space outside the individual apartment units should have been included in the calculation of school impact fees. Finding no reversible error, the Court of Appeal affirmed the judgment in favor of the District. View "1901 First Street Owner v. Tustin Unified School District" on Justia Law

GMRI, Inc. a restaurant operator, appealed a judgment entered in favor of the State Board of Equalization (the Board) after the trial court granted the Board’s summary judgment motion. Between 2002 and 2004 (period in dispute), GMRI operated Olive Garden and Red Lobster restaurants in California. Customers of these restaurants were notified on their menus that an “optional” gratuity of either 15 or 18 percent (depending on which restaurant and time period within the period in dispute) “will be added to parties of 8 or more.” When it was added, a manager was required to swipe his or her manager’s card through the restaurant’s point- of-sale (POS) system and then manually add the gratuity to the bill. The bill generated and presented to the customer would then contain the total cost of the meal, the applicable tax, the amount of the large party gratuity added by the manager, and the sum of these amounts as the total amount to be paid. In line with the word “optional,” the Company’s policy was that its restaurant managers would always remove a large party gratuity if asked by the customer to do so. However, unless such a request was made, the large party gratuity would remain on the bill as a portion of the total amount. And where that customer paid with a credit card, the credit card slip would contain the amount of the meal plus tax, the amount of the large party gratuity, the total amount, and then a blank line designated, “Add’l Tip,” followed by another blank line designated, “Final Total.” The trial court concluded a 15 or 18 percent gratuity restaurant managers automatically added to parties of eight or more without first conferring with the customer amounted to a “mandatory payment designated as a tip, gratuity, or service charge” under California Code of Regulations, title 18, section 1603 (g), and therefore part of the Company’s taxable gross receipts, in one circumstance: where the large party gratuity was added and neither removed nor modified by the customer. Finding no error in affirming the Board's decision, the Court of Appeal affirmed the trial court. View "GMRI, Inc. v. CA Dept. of Tax & Fee Admin." on Justia Law

GMRI, Inc. a restaurant operator, appealed a judgment entered in favor of the State Board of Equalization (the Board) after the trial court granted the Board’s summary judgment motion. Between 2002 and 2004 (period in dispute), GMRI operated Olive Garden and Red Lobster restaurants in California. Customers of these restaurants were notified on their menus that an “optional” gratuity of either 15 or 18 percent (depending on which restaurant and time period within the period in dispute) “will be added to parties of 8 or more.” When it was added, a manager was required to swipe his or her manager’s card through the restaurant’s point- of-sale (POS) system and then manually add the gratuity to the bill. The bill generated and presented to the customer would then contain the total cost of the meal, the applicable tax, the amount of the large party gratuity added by the manager, and the sum of these amounts as the total amount to be paid. In line with the word “optional,” the Company’s policy was that its restaurant managers would always remove a large party gratuity if asked by the customer to do so. However, unless such a request was made, the large party gratuity would remain on the bill as a portion of the total amount. And where that customer paid with a credit card, the credit card slip would contain the amount of the meal plus tax, the amount of the large party gratuity, the total amount, and then a blank line designated, “Add’l Tip,” followed by another blank line designated, “Final Total.” The trial court concluded a 15 or 18 percent gratuity restaurant managers automatically added to parties of eight or more without first conferring with the customer amounted to a “mandatory payment designated as a tip, gratuity, or service charge” under California Code of Regulations, title 18, section 1603 (g), and therefore part of the Company’s taxable gross receipts, in one circumstance: where the large party gratuity was added and neither removed nor modified by the customer. Finding no error in affirming the Board's decision, the Court of Appeal affirmed the trial court. View "GMRI, Inc. v. CA Dept. of Tax & Fee Admin." on Justia Law

CDLA filed suit against the DMV, alleging that the DMV conducts administrative hearings to determine whether automatic suspension of a driver's license was warranted after the driver has been arrested for driving under the influence. CDLA claimed that at these hearings, the hearing officers simultaneously act as advocates for DMV and as triers of fact. The Court of Appeal reversed the trial court's grant of DMV's motion for summary judgment, holding that taxpayer standing under Code of Civil Procedure section 526a was appropriate under the circumstances of this case, in which a group of taxpayers has alleged that a government entity was engaging in "waste" by implementing and maintaining a hearing system that violated drivers' procedural due process rights. Accordingly, the court remanded for further proceedings. View "California DUI Lawyers Assoc. v. California Department of Motor Vehicles" on Justia Law

CDLA filed suit against the DMV, alleging that the DMV conducts administrative hearings to determine whether automatic suspension of a driver's license was warranted after the driver has been arrested for driving under the influence. CDLA claimed that at these hearings, the hearing officers simultaneously act as advocates for DMV and as triers of fact. The Court of Appeal reversed the trial court's grant of DMV's motion for summary judgment, holding that taxpayer standing under Code of Civil Procedure section 526a was appropriate under the circumstances of this case, in which a group of taxpayers has alleged that a government entity was engaging in "waste" by implementing and maintaining a hearing system that violated drivers' procedural due process rights. Accordingly, the court remanded for further proceedings. View "California DUI Lawyers Assoc. v. California Department of Motor Vehicles" on Justia Law