MAYORS AND COUNCILMEMEBRS EXECUTIVE FORUM

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League of California Cities Mayors & Councilmembers Executive Forum May 29, 2008 Page 3 The trial court in Oronoz certified a plaintiff class challenging the County's UUT. Both the plaintiff class and the County argued on a writ to the Court of Appeal that the County's local claiming ordinance applied, but disagreed whether that ordinance permitted class claims. The Court of Appeal, disagreeing with a large number of published appellate decisions, including Batt v. San Francisco, 155 Cal.App.4`h 55 (2007), found that local claiming ordinances do not apply to tax claims to which no state statute other than the Gov't Claims Act applies, stripping local governments of the power to impose claiming requirements on many tax and fee challenges. The Court also found, contrary to precedent, that class claims against local taxes were permissible because such claims "substantially" comply with statutory claiming requirements. The California Supreme Court denied review and the case is now final. However, the Ardon, Granados and McWilliams cases are now pending before the same panel of the Court of Appeal in Los Angeles that decided Oronoz. In addition to arguing that Oronoz was wrongly decided, these agencies arguel that their local claiming ordinances are not preempted by the Gov't Claims Act and that the class plaintiffs failed to substantially comply with those local requirements. Ardon was argued on August 12, 2008 and local government counsel were able to persuade the very panel that had decided Oronoz to revisit the question. The Court vacated submission of the case and inviting amicus curiae ("friends of the court") briefs from local government groups and others on whether Oronoz should be overturned or narrowed. While local goverrunents are not yet out of the woods on the issue of class remedies in tax and fee cases, this is a hopeful development indeed. On April 28, 2009, the Court of Appeal resubmitted the case, starting a new 90-day clock for its decision. Thus, it is likely to be decided by July 27th. The case will likely be decided in 2009 and the McWilliams and Granados will likely be addressed by the Court of Appeal shortly thereafter. Calling Card Litigation: Sellers of prepaid telephone calling cards including Tracfone Wireless, Inc. and Sprint / Nextel Boost have challenged the application of UUTs which include references to the FET to their services. Tracfone sued the County of Los Angeles. The County demurred, arguing that Tracfone acted as a volunteer and lacks standing to sue for a tax refund. The trial court granted the County's demurrer, holding that Tracfone lacked standing to seek a refund of a tax that it was not obliged to pay, but only to collect. The Court of Appeal reversed, concluding Tracfone did have standing to seek a refund. Tracfone Wireless, Inc. v. County of Los Angeles, 163 Cal.App.41h 1359 (2008). The Court conclude that Tracfone's payments could not be viewed as voluntary, accepting Tracfone's argument that it had no administrative means to collect taxes from consumers who bought its calling cards and phones throughout the country (ignoring the likelihood that market forces would include such taxes in the sales price of the phone and cards) and that Tracfone was required by the County's ordinances to pay the tax before contesting it. The Court of Appeal remanded the case to try the factual claims, including whether Tracfone in fact paid the tax or 'The author of this paper and Sandi Levin of Colantuono & Levin represent the cities of Long Beach and Los Angeles in these cases. 73647.18