Supreme Court says Class Action over L.A. telephone tax

Los Angeles Times

-- Maura Dolan in San Francisco

July 25, 2011 A class action lawsuit against the city of Los Angeles for a refund of potentially hundreds of millions of dollars in telephone taxes may proceed as a result of a unanimous ruling Monday by the California Supreme Court.

The ruling, written by Justice Ming W. Chin, upheld the right of citizens to bring class actions against municipal governments for collection of allegedly illegal taxes.

The decision will affect similar lawsuits against Los Angeles County, Long Beach and Chula Vista, lawyers in the case said. The suits claim that the governments have illegally taxed telephone users. The tax appears on phone bills.

The case against L.A. was filed in 2006. The city argued that the taxpayers should have filed individual claims for refunds before bringing a class action and won in the trial court and the appeals court.

As a result of Monday's ruling, "It's possible we will consider bringing actions against other jurisdictions," said Frank Gregorek, who argued the case for the taxpayer. The class that would recover funds would include all residents who paid the taxes.

During the years at which the suit is aimed, L.A. charged users a 10% tax on their phone bills, he said. City voters later approved the tax but lowered it to 8%, he said.