Updated: February 2013

Ardon vs. City of Los Angeles

The class action lawsuit Ardon vs. City of Los Angeles argued that the Los Angeles Telephone Users’ Tax (TUT) was unconstitutional, and that taxpayers have the right to file a class action lawsuit seeking refunds when taxes are collected inappropriately. Despite opposing rulings by lower courts, the taxpayers’ position was validated when in July the California Supreme Court ruled in favor of the plaintiff, Estuardo Ardon and other members of the class.

Consumer Action signed onto an amicus brief in support of the class action, which alleged that Los Angeles had illegally collected taxes and refused to refund those levies.

In 2006, Ardon discovered the city had been collecting TUT on long distance and bundled services despite legal rulings that the federal telephone tax did not apply to these services. Ardon filed an administrative refund claim on behalf of himself and other taxpayers. The claim was rejected, prompting Ardon to file for relief, using a case called City of San Jose v. Superior Court as a precedent. In a 2008 Second Appellate district case the court ruled that class refund claims to recover local taxes were permissible. Nonetheless, the same appellate court refused to apply the City of San Jose ruling to the Ardon case.

The plaintiffs petitioned the California Supreme Court to review the state Court of Appeal’s opinion and clarify the discrepancy between the two cases. In July, the high court ruled that taxpayers have the right to file class claims for refunds even where there is no refund procedure in place.

For more information, visit Stanford Law School's Supreme Court of California Resources.

 

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