McWILLIAMS v. CITY OF LONG BEACHRespondent’s Opening Brief on the MeritsCal.September 20, 2012 CITY ATTORNEY’S OFFICE ROBERT E. SHANNON(43691) J, CHARLES PARKIN (159162) MONTE H. MACHIT(140692) 333 West Ocean Bivd., I 1" FI. Long Beach, CA 90802-4664 — Poppers VAIPELD DETQUISCpS ) OW FEED Vy ii re OPNoo $202037 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA JOHN W. MCWILLIAMS Plaintiff and Appellant, Vv. CITY OF LONG BEACH, Defendant and Respondent. SUPREME COURT PILED SEP 20 2012 Frank A. McGuire Clerk Deputy CITY OF LONG BEACH’S OPENING BRIEF ON THE MERITS Of an Unpublished Decision of the Second Appellate District of the Court ofAppeal Case No. B20083| Reversing a Judgment of the Superior Court of the State of California for the County of Los Angeles, Case No. BC361469 Honorable AnthonyJ. Mohr, Presiding (562) 570-2200 (213) 542-5700 (562) 436-1579 (fax) 111688.5 (213) 542-5710 (fax) COLANTUONO & LEVIN, PC MICHAEL G. COLANTUONO(143551) SANDRAJ. LEVIN (130690) TIANAJ. MURILLO (255259) 300 S. Grand Ave., Suite 2700 Los Angeles, CA 90071-3137 $202037 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA JOHN W. MCWILLIAMS Plaintiff and Appellant, V. CITY OF LONG BEACH, Defendant and Respondent. CITY OF LONG BEACH’S OPENING BRIEF ON THE MERITS Of an Unpublished Decision of the Second Appellate District of the Court of Appeal Case No. B20083| Reversing a Judgment of the Superior Court of the State of California for the County of Los Angeles, Case No. BC361469 Honorable Anthony J. Mohr, Presiding CITY ATTORNEY’S OFFICE COLANTUONO & LEVIN, PC ROBERT E. SHANNON(43691) MICHAEL G. COLANTUONO(143551) J. CHARLES PARKIN (159162) SANDRAJ. LEVIN (130690) MONTE H. MACHIT (140692) TIANA J. MURILLO (255259) 333 West Ocean Blvd., 11° FI. 300 S. Grand Ave., Suite 2700 Long Beach, CA 90802-4664 Los Angeles, CA 90071-3137 (562) 570-2200 (213) 542-5700 (562) 436-1579 (fax) (213) 542-5710 (fax) 111688.5 TABLE OF CONTENTS Page ISSUES PRESENTED FOR REVIEW........ccccecesecssscecseseeseceeeeeeseesesenseceeeseseaeees 1 INTRODUCTION 00. eeccceccesecessssceescesceesececcesesessescseseescssssseesssasscsessseessneseeaseseeees 1 STATEMENT OF FACTS AND PROCEDURALHISTORY.....cece4 1. The City’s Telephone Users Tax and Appellant’s Claim...4 II. Trial Court Proceedings 0.0... ccccseecesseeseeeccssnecsessssesessescssesesesscseeneseseeees 6 HI. Court of Appeal Proceedings...escccsesseesceceerseeeeeaeseseeeeneneses8 IV. This Court’s Grant of REVIOW .0....ecccsscceeesescsececseeceeesaesseseeseeseeseseeenees 10 STANDARD OF REVIEW ......cccceccecessssesesseseseseseeseseseceeseseseeeesecseassanaessasesnsneees 11 LEGAL DISCUSSION ecccececsesececeeessesseseesesessseessssseesececseacessseenreacecsesersasaaensened 12 I. Long Beach’s Ordinances Do Not Permit Class Claims for Tax RefUNSoeeececceeceseecesecseseesesecescseaacecessensessecacseesconenssassaesaceseseessaesseeasenens 12 A. LBMCSection 3.68.160 Does Not Permit Class Claims.......... 12 B. Appellant Fares No Better Under the City’s General Claiming OTdinaNnce«0... ccccseceeccesceseseeceeeeessesescscscseseeeteneesecasesusnesssesessetaeeeeees 14 C. Interpreting City Ordinances to Authorize No Tax Refund Violates Principles of Statutory Construction...eee16 II. Government Code Section 905, subd. (a) Authorizes Local Tax 111688.5 Refund Requirements .........cccccccscseccesecesserseersesescssecscsenecseencaseeeeseeeneeseaeae 18 A. The Legislative History of Section 905, subd. (a) Demonstrates That “Statute” Includes Local Ordinances...19 1. The 1959 and 1963 Claiming Statutes Had Fundamentally Different Objects and Each Uses “Statute” Differently 0.eeeseseeeeeeeeseeeeeeaeeeeeeeeeeeeees20 Til. 111688.5 2. The 1959 Legislature and Contemporaneous Courts Understood “Statute” to Include Local Ordinances and Charter Provisions .......cccccccsscceeeesssecssestscseseeresseteeseeeees21 3. The 1963 Legislature Had No Intent to Displace Local Claiming Requirements...cececeseeseseceeeseeseeeeeeeeees22 The Claims Act and Other Statutes Underscore the Diversity Among State-Regulated Local Taxes the Legislature Finds APPLOPTlate «0.0... cecececeeseeeeeeeeeeseeceeeesensnseessesseseesseseeeeesscesesseeeseseees27 1. The State has Provided Claiming Requirements for State and Local Taxes and Has NotRelied on the Government Claims Act to Do 50...eceereeseeeeeees27 2. The Legislature Has Long Relied Upon Local Governments to Regulate Local Taxes «0.0...29 The Government Claims Act Definitions Do Not Apply “Where the Provision or Context Otherwise Requires”.........30 Local Claiming Authority is of Long Standing and Reflects Fundamental Public Policies .........c.ccceccccccccsececcecceceetsetsceceseescesssnscsceeceee 35 A. This Court’s Precedents Preserve Long-Established Local Legislation Governing Tax Refund Claims «0.0.0...cee35 1. Volkswagen Pacific Enforced a Local Ordinance.............35 2. Oronoz Is the Only Case To the Contrary and Has Since Been Repudiated By the Panel That DecidedIt............38 Public Policy Compels Legislative Authorization for the Refund of Local Taxes... ccccccecssesessesceescscsssssceseseseesseeeseeens39 For Similar Reasons, the Powerful and Expensive Class Action Remedy Is Not Appropriate in the Tax Refund Context........4] i 1. The Law Provides Ample Remedies to Correct Tax Errors Without Class Actions.0........cccceeceseecceereeseneeesnesees42 2. Other States Preclude Class Actions in the Tax Refund CONTEXE 0... eeeessessceereceeeecseeseececcsceteceeseseretsceseeaeeeeeteseneeeeneess44 IV. McWilliams’ Construction of Section 910 Raises Constitutional Issues That Are Better Avoided ou...eeeceeeeeeseeseeereeeeecesesseeeaeeaeeeeeess46 A. Charter Cities Have Home Rule Powerto Tax .0...cesses46 V. Article XII, Section 32 Requires Express Legislative Authorization of Tax Refund Procedures......ccsccscesesscecsseeseceseeseecseeestecesseseseeeeneeseeseansenes49 A. The Second Sentence of Article XIII, Section 32 Applies to Local Government.........:cesecceeecseeeeseseeeeseeeeseeceseseseeeeseersaeeenseeeaees50 B. EvenIf Article XIII, Section 32 Does Not Apply, the City’s OrdinancesStill Provide the Rule of Decision ...........c.eee52 CONCLUSION0...ccccccccccccessssecsccccececesecccceeceecssecececccescccceccossstccccececerseseensaetacscess 52 CERTIFICATION OF COMPLIANCE2.0.0... ccccececcccccccceesscececcecceeseecscstecnceceee 55 APPENDIX... eee ececcccccescecccccecoceccecesccececesssccccscecsssssscsssncccsccscessessseaceecasaveeeeeseensaees56 ili 111688.5 TABLE OF AUTHORITIES Page CASES 420 Caregivers, LLC v. City of Los Angeles (2012) 207 CalApp.4th 703 o.ccccceeeeseeereeseereesesseneneerecesacseesssesaseasenensenens 30 Ardonv. City ofLos Angeles (2009) 174 Cal.App.4th 369, review granted and opinion superseded, 216 P.3d 522(Cal. 2009) oo. ceccseessssescsceecseesssrsssseecseessesestseeeeereeaes 3, 8, 38, 39 Ardon v. City ofLos Angeles (2011) 52 Cal.4th 2410 ccccccssssscsecssecssesssscescscsssseessesseasssesseeseeseaees passim Batt v. City & County of San Francisco (2007) 155 CalApp.4th 65.0.0... ccccccecneeecsseeseceeessseeceerareeseeeneeneessees passim Blank v. Kirwan (1985) 39 Cal.3d 311...ececccsecesesesseeecesceressseseesessscscseersesesseeceseeneeseenseeseeeees 12 Cal. Fed. Sav. & Loan Ass’n v. City of Los Angeles (1991) 54 Cal. 3d Lin. eeccecsssscsessecsenessesesssecessscsesssesssessnsesecsssesseeeeesseasansens 46, 48 Compania Gen. de Tabacos de Filipinas v. Collector of Internal Revenue, (1927) 275 U.S. 87 v.ecccceecsssssssesesesccssssseecssesssceacasecseeecessneeseseseeseesseaseesesaeeas 41, 42 County of Los Angeles v. Superior Court (Oronoz) (2008) 159 CalApp.4th 353...ccsccceceneseessensseeetseensnssseasasesesenseessnees passim Cruise v. City & County of San Francisco (1951) 101 Cal.App.2d 558... ccecseeeeceseseseesssnsesesesenesseseseasseesessenenaneens 22 D’Amico v. Board ofMedical Examiners (1970) 6 CalApp.3d 716....ccccccccccesececeeterececscecerscseresesesssscsesesersessenseecaeeeees 16 Dunn v. Bd. of Prop. Assessment, Appeals and Ruw. (Pa. Commw.Ct. 2005) 877 A.2d 504occeesescseseseeensseesensnseesereeseeneess 46 iv 111688.5 Eastlick v. City of Los Angeles (1947) 29 Cal.2d 661.0...eeessceeeesesececeeceesesesesscsesecsseseeeenansssesesseseeeseseees 47 Farrar v. Franchise Tax Board (1992) 15 CaLApp.4th 10...ceseccssessseneseneesesnsneastesssaeseeseessaeeeneseseesseets 43 Flying Dutchman Park,Inc. v. City & County of San Francisco (2001) 93 Cal-App.4th 1129...cccccseesessneeseneeseessessssseseesseseseesseees 39, 51 Germ v. City & County of San Francisco (1950) 99 CalApp.2d 404.0...ceceseseseestenseseseeetsnsneneeesesesesesseeeenetseneenenees 22 Granados v. County of Los Angeles Cal. Ct. App., Case No. B200812 ......cceeeeseesesereeeerensesesseneesesenerseneens 7, 8,9, 10 Hassan v. Mercy Am. River Hosp. © (2003) 31 CalAth 709 o..ceeccceccsecsssecsecseesnsessstscesesnseesatensneensesusessusesseesnsenseeneeneen 32 Horwich v. Superior Court (1999) 21 Cal4th 272 occccseescscessessesesseetsssesesssesscsssreeseseeessessesseeenesseseeeees 32 Howard Jarvis Taxpayers Ass’n v. City of La Habra (2001) 25 Cal4th 809 oo.eceeceecessseesensseesesensesneneesesesesenenessenseees 2, 38, 43 Howard Jarvis Taxpayers Assn. v. City of Los Angeles (2000) 79 CaLApp.4th 242.0.eeeeeeesseeeeseneesteesaeseasneesanseneneenees 36, 40 IBM Personal Pension Plan v. City & County of San Francisco (2005) 131 CalApp.4th 1291oesceceseneseneeeesseseseneneeesnenseneneeeeeeay 28 Jones v. Bd. of Educ. of Watertown City School Dist. (N.Y. App. Div. 2006) 30 A.D.3d 967oo.ceecccecce tees ceeeeeeecseseneneeseisnseneeseneeney 44 Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) 53 Cal.3d 245...eeeecceeseeenseeescneseseeesssessesseasseesseneeneceecseneeeeees 31 LaCarruba v. Legislature of the County of Suffolk (N.Y. App. Div. 1996) 225 A.D.2d 671 oo.eccccecceeeeeteeeeeceeeeseeesneeeeseneeeesees 44 Lacey Nursing Center, Inc. v. Dep't of Revenue (Wash. 1995) 905 P.2d 338 oo.ceececeeeesesceseceeesesenesecesnesseessenessescaecsecseaegs 45 Vv 111688.5 Los Altos El Granada Investors v. City of Capitola (2006) 139 Cal.App.4th 629.00... ceccecsssecceseseeseseeseseeesscscsesesesesesssssesenesseaees 17 Macy’s Dept. Stores, Inc. v. City & County of San Francisco (2006) 143 Cal.App.4th 1444.00ccececeeseeceseeseeseseeeesesesessessenseesesees 51 McKesson v. Division ofAlcoholic Beverages & ‘Tobacco (1990) 496 U.S. 18 ooo.ceec ee esececeeecenenesseeeneeseeseseeeeseeseenesesesseseeeneneaeey 42, 43 Muskopf v. Corning Hosp. Dist. (1961) 55 Cal.2d 211oo.eceseeesceeereeneesesecsssecsensessesseeesenses 19, 23, 24, 53 Neama v. Town of Babylon (N.Y. App. Div. 2005) 18 A.D.3d 836 ooo.ecesseeeeessssessensesssesseeseneeeees 44 Neecke v. City of Mill Valley (1995) 39 Cal.App.4th 946.000...cececcceeescseeenecensenenesssesseseceeeseseeeseseeneeaeanes 43 Parodi v. City & County of San Francisco (1958) 160 Cal.App.2d 577... cccccceccsccscecceessscsesecssnsssceenssscussecsseesseeenseeeaseees 22 Pasadena Hotel Dev. Venture v. City of Pasadena (1981) 119 CaLApp.3d 412...cces csceseneesenseseneesaneeeneege 21, 23, 24, 37 People v. Cruz (1996) 13 Cal.4th 764oeeeeeesocesescaseeesesenseecaceacantansseacseeesesensnesanes 21 Pourier v. South Dakota Dept. ofRevenue and Regulation (S.D. 2010) 778 N.W.2d 602. oo..cecececccccceeccesesesenecsceessneseesasseseesecesaeeeesneeeeeneenes 45 Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal4th 220 oo.ceececseceseececseseeeeneesessesaesesassesaeseesaeeesseeasees 2 State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633eeeesccseececcctseeccecssssesesetscssnecassesaecaseesseseaaessenesees 50 State ex rel. Lohman v. Brown (Mo. Ct. App. 1997) 936 S.W.2d 607oescece eneeeeee tee ceeeeeeaetateeneeneees 45 Stearn v. County of San Bernardino (2009) 170 CaLApp.4th 434.000eeccseceeceeeeeenseeseceerasseesenetsesseeeseneneeees 11 vi 111688.5 Stolman v. City of Los Angeles (2003) 114 CalApp.4th 916...ceceeeeceeseesesesassesenecseseessnensecsesssssseees 16 Taylor v. City of Los Angeles (1960) 180 CalApp.2d 255occececseseseceseseeseeeserscssseesessssesseessesseseeeseeease 47 The Pines v. City of Santa Monica (1981) 29 Cal.3d 656.0...ccccece csecceeeeeseeessessssesscesssesesssesssacscsesesesasenes 46 Van Wagner Communications, Inc. v. City of Los Angeles (2000) 84 CalApp.4th 499.ecceeceereeeesensesessesesessssassesssetseterssesnes 17 Vo v. City of Garden Grove (2004) 115 CalApp.4th 425ooeeecesceeeseesescassecsseaesassseetseessesseesasseees 16 Volkswagen Pacific v. City of Los Angeles (1972) 7 Cal.3d 48... eccccceseessceescecssessneeseceseneeseeeseesesscesseeeeeesseesessensessees passim Wicker v. Comm’r (Tenn. Ct. App. 2010) 342 S.W.3d 35 weeeetceeeeeecesceeeseesessesseceeeseretseneeens 46 Wilcox v. Birtwhistle (1999) 21 Cal.4th 973 ooocccccees canes ececcseaeeensesessesucesscseesesseseeesatscsseaeegs 34 Woosley v. State of California (1992) 3 Cal.4th 758 woeceesce secsecseeeceseeeeseseeseeeteseetecseceneetecaes 9, 43,45, 49 Writers Guild ofAmerica, West, Inc. v. City ofLos Angeles (2000) 77 CalApp.4th 475.eececsecseescesceseccecaceeceecscsesseescssseaseasseaeeneess 51 STATUTES Business and Professions Code § 5499.14.00. .ecccesceescsseeeeecseeeceseseseeteneeseeeeees28 Government Code § 810 ...ccececccsseecceeeesessceecessesenseensescesessseseesseseneesens passim Government Code § 810.6 oo... eceecessccesseseessessecessessecseeseeeesncenseseesecnenerseeeaees25, 31 Government Code § 811... ceccceescesesseceseessececeeseesceccsseesserseenecsaeeseeseesecnseseeasens25 Government Code § 811.6......cccecccccesecsesssesseeecesseesseesseesseesnes 25, 31, 32, 33, 34 vil 111688.5 Government Code § 811.80... ccccesesssesssseeseneesseessesseseessnessenenesseseeeaseeneees passim Government Code § 815...eeceneenseessessecscesesancseessssecaeseceseseessenecessneeeaeees 7, 26 Government Code § 905 (a)...eesssseeseceessesceessesnecssesseescessesonsesaeseserseeeass passim Government Code § 910... cccseseseneeseensesseeseneesessaesensenseessceneseeeeees passim Government Code § 935.0... eeesscsccssseceneceseeeseesceceecececsecssessenecesnsessnesees23, 32,35 Government Code § 935 (a)eeecesseessesseesessecrscseceecnsesereresseesaenee 31, 32, 34, 52 Government Code§ 945.60... scsscsccseccseesseeseessesecsaeessceecesessresssesseeensneeareeesaes35 Government Code § 995.2... eecsecesseecsseeeeceececeeseceesecsceteesesasesessceesateereeseees33, 34 Government Code § 11342.60000.0... eecceeceencesseeeeeeeeeseceeeceneecnteeesaceeeessenseeeeeaeens32 Long Beach Municipal Code § 1.08.010 0.0...ecseeeeseeeeeeeeecserereeeeesaeeaees 14 Long Beach Municipal Code § 1.08.130 .0... ec eesseeeeeeeeesseteesceeeceeesseseseeeees 15 Long Beach Municipal Code § 3.48.060 00.0... eeeseeeescseneeeeseeteeeteee7, 14, 17 Long Beach Municipal Code § 3.48.070 ........cececsssesesesetesteteneseensesseteenetees 14, 15 Long Beach Municipal Code § 3.68.160 ..........ccssccsssesesseeessesesereeeeeseeeene passim Public Utilities Code § 799eeeesessccssseecssecescsecsscessessesessasesceeeseaeeeseeesasenenases 29 Revenue and Taxation Code § 255 (a)... cessseccesscsseeteseseneeesseceecseeeeeesneeneses27 Revenue and Taxation Code § 255 (Db) oo... eee eeeeesccseceececeseeteceeceseeseeteseneeness27 Revenue and Taxation Code § 4985 ooo...eeeeecsesecseceeeeseeecsereeerseeeaeeeanesneeasens27 Revenue and Taxation Code § 5096 0...eee esssessceseceessceessceeeneesseseseaceseessneenees27 Revenue and Taxation Code § 5097.00... cecssseneceeeeeceeesseeeeeesnecsecseeenseeneeenas 28 Revenue and Taxation Code § 5140.00... eeeeecsseceesseneeseceseaeeseeseeeeteseneenseesaeens 28 Revenue and Taxation Code § 6933 .....cccecseesssecsessesseeseecsesecesseeesseeeetseeseneess27 Vili 111688.5 Revenue and Taxation Code § 7280.......:ccsccssessseessessesceesessesceseeesseseseeslanseaeeas30 Revenue and Taxation Code § 10901 ......ceccccessccessesssessccescesesscestesseeeseesseeees28 Revenue and Taxation Code § 11934 o..ccccecccscesseesssssesseeseessesecsscsssseesseesseneees28 Stats. 1959, CH. 1724...eceseessecceceseceesceeceseeceeseaeesesacesesaesseseesseeeseeseessesseneeaes 19 Stats. 1963, Ch. 1681oesceeseeneseeeeseceeeeeceeeeseesensecesecsceseeseseeseeseneesueenseseees20 Stats. 1987, CH. 1201 oo.eeeescceeeseeseeeseeseeseccesenseseesseeasenseseseseseessseeeeseeseeenseesees32 Stats. 1987, CH. 1207ooo. eeeeseceeceeseeceseeseeeseececeeeeseessesetscenesarersatenseseessaeeeseeseeseees32 OTHER AUTHORITIES Black’s Law Dictionary (5' ed. 1979) wooseceesseeeseeeceeseneeeceeeeceseaseseeneeeeees24 California Constitution, Article XI, § 3 wocccccccccccccsssssscsssessesesesesssesessscsescseeseens 1,4 California Constitution, Article XI, § 5 o..cccceecceseceeeteceteteteeetesesees 1, 4, 46, 47 California Constitution, Article XI, § 07 o.c.cccccccccccssesessssssesesceeeessseseseessesecenseseseeees 1 California Constitution, Article XT, § 12 ..ccicccccccscsscsssscssssssesssssescssecsesseceseesens 47 California Constitution, Article XII, § 320... cccccccesecsseceseesecessssteeeees passim California Constitution, Article XIII C, § 2(D) ....ececeseseesssseteeseesesseseneeseeasenees 6 California Rules of Court, Rule 8.520 (h).0....:cccceessesseesesceeeeseeseesesesseeseeeeeneaes 19 California Rules of Court, Rule 8.1105 (C) ...ceececceseceeceeseeseeseesseesseceesensensees 11 California Rules of Court, Rule 8.1115 (b)(1) wo.ccescecseeseeteeseeeneens3, 7,8 Cal. Law Revision Commission Rec. and Study 2 Cal. Law Revision Com. Rep. (1959) oo... eececeeeseseesseesenees 19, 21, 26, 53 ix 111688.5 Cal. Law Revision Commission Rec. re Sovereign Immunity, No. 1 4 Cal. Law Revision Com.Rep. (1963)......ccsccssessesersereeeeeeseeenseneeeenes24, 25 Cal. Law Revision Commission Rec. re Sovereign Immunity, No. 2 4 Cal. Law Revision Com. Rep. (1963) .....cccsssessesseseseensenseeenenseseneenenens23 IRS Revenue Ruling 79-404, 1979-2 C.B. 382 ....ccccccseceseseesessesenetseneeeeneseseneeees5 IRS Notice 2006-50 0.00.0...cc ccescesssssssssceceeeceesseneesecensueeeeseceeseesesseeeeeceeceesenaes5,6 TRS Notice 2007-11 oo.eecescsseccseceeeeenseeseesssnsesessesssesessesseessessesssseneeseneseesees5, 6 Office of Legislative Counsel's Report on A.B. 405 (1959) ....ccccceseseseeeeees 19 x 111688.5 ISSUES PRESENTED FOR REVIEW 1. Government Code § 905 (a) excepts “claims under ... [a] statute prescribing procedures for the refund ... of any tax, assessmentfee or charge” from the scope of the Government Claims Act.! Did the Legislature use “statute” in this section to exclude local legislation and to require claims for refunds of local taxes, assessments, fees and charges to be governed by the Government Claims Act? 2. If so, does § 905 (a) violate the home rule powerto tax conferred on charter cities by Article XI, §§ 3, 5 and onall cities and counties by Article XI, § 7 of the California Constitution?? 3. Does the second sentence of California Constitution, Article XII, § 32, which requires express legislative authorization for tax refunds, apply to local government? INTRODUCTION Until County of Los Angeles v. Superior Court (Oronoz) (2008) 159 Cal.App.4th 353 (hereinafter, “Oronoz""), no case questioned the powerof local governments, acting by ordinance or city charter, to control the 1 Government Code § 810 et seq. *All unspecified section references in this brief are to the California Government Code. Unspecified references to articles and sections of articles are to the California Constitution. 1 1116885 manner by which claims for refunds of taxes, fees and assessments? may be made. The strong public policy in favor of predictable funding for essential government services reflected in Article XII, § 32 of the California Constitution explains this long-standing rule. Moreover, the Government Claims Act procedures designed for ordinary tort and contract claims are not well suited to tax refund claims, as evidenced by the Legislature’s 1959 decision to exempt such claims from the Act via what is now Government Code § 905, subd. (a). This is especially true for taxes — like those in issue here — as to which a private tax collector rather than the tax payer is obligated to remit the tax to the levying government, and a risk of double recovery thereforearises. Oronoz disparaged a longline of decisions reflecting the earlierrule. It was apparently influenced by the equities of a case in which Los Angeles County refused to seek voter approval of its utility tax for more than a decade after this Court made clear in Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220 and Howard Jarvis Taxpayers Ass'n v. City of La Habra (2001) 25 Cal.4th 809 (hereinafter, “HJTA v. La Habra”) that it was obliged to do so. The very appellate panel that 3 For convenience, this brief will refer to claims for refunds of taxes, assessments andfees as “tax refund claims”as the principles in issue apply equally to all local government revenues and the revenue measure in issue here is a tax. 111688.5 decided Oronoz promptly repudiated itt leading to this Court’s 2011 decision in thatcase. Of course, Ardon v. City of Los Angeles (2011) 52 Cal.4th 241 (hereinafter, “Ardon”) expressly reserved whether local claiming ordinances may apply to tax refund claims. Thus, this case presents an opportunity to restore the law to its long-standing posture predating Oronoz and to eliminate ambiguity as to the powerof local governments to fashion sensible rules governing claims for refund of local taxes that the Legislature has never provided, is ill-suited to provide, and whichit intended to supplement the general rules of the Government Claims Act. To do otherwiseis to read legislative silence that reflects delegation to local governmentas legislative intention to apply the usual Government Claims Act rules to tax refund claims. Such a reading works a sea change in California’s local finance law and ignores the contrary legislative intent plainly demonstrated by the history of the Act. Reexamination of the Eisenhower-era legislative history of Government Code § 905, subd. (a) will allow this Court to avoid difficult constitutional questions that otherwise arise. That history plainly shows the intent of the Legislature in 1959, when the Act was first adopted, and 4 Ardon v. City of Los Angeles (2009) 174 Cal.App.4th 369, review granted and opinion superseded, 216 P.3d 522 (Cal. 2009) and rev’d, 52 Cal. 4th 241 (2011). The City cites the Court of Appeal’s decision in Ardon, overtaken by this Court’s grant of review, pursuant to Rule 8.1115, subd. (b)(1) to provide the procedural history of this dispute. 3 111688.5 again in 1963, when the relevant statutes took their current form, to exemptlocal tax claims. Should the Court determine to reach those constitutional questions, however, this brief demonstrates that the Legislature may not subject local tax refund claims to the Government Claims Act’s common procedures for tort and contract claims without offending the power reserved to charter cities by Article XI, §§ 3 and 5. Moreover, the second sentence of Article XH, § 32, unlike the first, extends to local governments and protects the public interest in local fiscal predictability and integrity and the separation of powers between the judicial and political branches by requiring express legislative authorization for refundsof local taxes. | For all these reasons, the City of Long Beach (the “City”) respectfully urges this Court to affirm the trial court's grant of demurrerin this case, disavow Oronoz, and in light of the legislative history, reaffirm the many cases concluding that Government Code § 905, subd. (a) preserves local government powerto establish reasonable procedures for refunds of taxes, and that such procedures maybarclass actions. STATEMENT OF FACTS AND PROCEDURAL HISTORY I. The City’s Telephone Users Tax and Appellant’s Claim Appellant John W. McWilliams (“Appellant” or “McWilliams”) filed the complaint here on behalf of himself and a purported class alleging matters that have yet to be reached by any court — this appeal arises from a successful demurrer. McWilliams’ allegations involve the effect of the 4 111688.5 changing interpretation of the federal excise tax (FET) on telephony on local agencies’ interpretation of their own telephonetaxes. In particular, Appellant objects to the manner in which the City has calculated its telephone users tax (TUT), and claims that changesin the interpretation of the FET require a reduction in the City’s TUT tax base because the City’s ordinance makesreference to the FET in defining that base. However, since the TUT’s inception, the City has consistently applied it to calls priced on the basis of duration alone, as well as those based on duration and the distance between the telephones served by a call. Indeed, until July 2006, the federal government construed the FET in the same manner and had done so since at least a 1979 Internal Revenue Service (IRS) ruling on which the City relied in enacting its tax. That 1979 IRS ruling remained undisturbed for nearly 30 years despite transformative changes in the telecommunications industry. (See Revenue Ruling 79-404, 1979-2 C.B. 382, MJN> Exh. A.) Appellant contends that, when the IRS changedits position with respect to the FET in July 2006 via Notice 2006-50 (MJN Exh. B), the City was required to change its longstanding interpretation of its TUT ordinance as well.6 5 “MJN”refers to the City’s Motion for Judicial Notice In Supportof its Opening Brief on the Merits, filed concurrently with this brief. 6 Appellant maintains this position despite that the IRS issued a subsequent notice clarifying that Notice 2006-50 was not intendedto affect the power of state and local governments to impose or collect telecommunication taxes under their respective laws. (See IRS Notice 2007- 5 111688.5 After Notice 2006-50 issued, the City Council acted by ordinance to clarify that the TUT’s reference to the FET meant that tax as the IRS construed it when the City first adopted that reference and indeed as the IRS construed it from at least 1979 until 2006. The Council stated that the IRS’ narrowing of the federal tax did not reflect the City’s intent with respect to its own tax. Appellant sued, claiming the City’s clarification was a tax “increase” requiring voter approval under Proposition 218, Article XIII C, § 2, subd. (b). The City respectfully submits that it has persuasive arguments on the merits in this dispute, which have yet to be considered by any court. Thus, any attempt by Appellant to characterize its challenge to the trial court’s procedural rulings as an inevitable victory on the merits should be regarded, at a minimum, as premature. lf. Trial Court Proceedings Appellant filed his complaint in November 2006, asserting these causes of action: (1) declaratory and injunctive relief to prevent collection of the TUT; (2) declaratory relief regarding the City’s ordinance clarifying the intent of the local tax’s reference to the FET; (3) money had and received; (4) unjust enrichment,’ 11, MJN Exh.C at § 10.) 7 Such common law claims as the third and fourth listed here, of 6 111688.5 (5) violation of due process, and (6) a writ claim. (CT, 18-21.)® The complaint did not allege the individual members of the asserted class had filed administrative claims and relied only upon McWilliams’ own claim, which purported to speak for a class. (CT 15 at { 65; CT 40-42.) This case was oneof three involving nearly identical complaints and the same counsel. The others were Ardon and Granados v. County of Los Angeles (hereinafter, “Granados’).? Plaintiffs filed a notice of related cases and the three suits were assigned to Judge Mohr. These three jurisdictions were sued apparently because they represent some 40% of the telecommunications market in California. — The City demurred to the McWilliams complaint, arguing — among other things — that Long Beach Municipal Code § 3.68.160 and § 3.48.060 disallow class claims. (CT 73; see also MJN Exhs. G and F.) Judge Mohr sustained the demurrer. (CT 113.) McWilliams declined to amend his complaint and appealed. (CT 150, 158.) course, do notlie against governments in California. (Cal. Gov. Code § 815, subd.(a).) 5 CT refers to the Clerk’s Transcriptof the trial court action. ° Cal. Ct. App., Mar. 28, 2012, B200812. The City cites the Court of Appeal’s decision in Granados, pursuant to Rule 8.1115, subd. (b)(1) to provide procedural history and context, not substantive argument. 111688.5 lll. Court of Appeal Proceedings McWilliams filed his notice of appeal July 19, 2007. In August 2008, the Court of Appeal stayed the appeal pendingits decision of Ardon. Thus, when the Courtof Appeal issued its published opinion in Ardon in May 2009 — questioningits earlier decision in Oronoz'® — it had both Granados and the instant case before it. This Court, of course, granted review of 10 Justice Joan Dempsey Klein was the swing vote as between Oronoz and Ardon andin her concurring opinioninthe latter case stated: “In view of the confusion in this area, it would be helpful for the Supreme Court to grant review in this case in orderto resolve the conflict between the Oronoz decision and the majority opinion herein. Review is further warranted because the question presented, i.e., whether Government Code section 910 authorizes a class claim for tax refunds, is a major statewide issue with serious implications for the publicfisc. Currently, this Division alone hasat least two other appeals involving the same issue.” Ardon v. City of Los Angeles, 94 Cal. Rptr. 3d 245, 257-58 (2009) review granted and opinion superseded, 216 P.3d 522 (Cal. 2009) and rev'd, 52 Cal.4th 241 (2011). Again, the City cites the Court of Appeal’s decision in Ardon pursuant to Rule 8.1115, subd. (b)(1) to provide the procedural history of this dispute. 111688.5 Ardon.™ McWilliams and Granados remained stayed by the Court of Appeal pending decision in Ardon. This Court’s 2011 ruling in Ardon holds that § 910 permits class claims for tax refunds whenthat section supplies the rule of decision. This Court explained that the rule of Woosley v. State of California (1992) 3 Cal.4th 758, 789 — that class claims for tax refunds require express legislative authorization — “requires that a court analyze the claimsstatutes beforeit to determine whetherthe Legislature intended to allow class claims under those statutes.” (52 Cal.4th at 251.) Like Woosley, Ardon confirms that a court must analyze applicable tax refund procedures — in this case, the City’s municipal ordinances — to determine whether class claims are permitted. Significantly, Ardon does not hold that § 910 governsall claims for tax refunds against local governments or that §910 preempts local claiming requirements. This Court was careful to reserve that issue, which was not before it.” Instead, this Court concluded that class claims are allowed by § 910 “in the absence of a specific tax refund procedureset forth in an applicable governing claims statute.” (Ardon, 52 Cal.4th 241, 251.) "Id. 2 Although the City of Los Angeles asserted that certain of its ordinances constituted applicable claiming requirements, the Court of Appeal concluded otherwise and the City did not pursue the issue before this Court. (Ardon, 52 Cal.App.4th at 246, fn.2.) 9 111688.5 Specifically, Ardon did not hold that local claiming ordinances are not “statutes” for purposes of § 905, subd. (a)’s exclusion from the Government Claims Act of “[c]laims under the Revenue and Taxation Code or other statute” prescribing refund procedures for taxes, fees or assessments. (Emphasis supplied.) Indeed, Ardon twice references local claiming ordinances. (Ardon, 54 Cal.4th at 250 [“[the foregoing] cases all considered statutes or municipal ordinances enacted to provide specific procedures for filing tax claims against governmental entities”] and 251 [“the claim here did not involve any applicable municipal codeor statute governing claims for refunds”]) (emphases supplied.) Ardon also reserved the question whether the second sentence of Article XII, § 32 applies to local governments. (Ardon, supra, 54 Cal.4th 241, 252.) This Court concluded that § 910 permits class claims for tax refunds in the absence of local claiming requirements whether or not the second sentence of Article XIII, § 32 applies to local governments. These reserved questions are now before this Court. IV. This Court’s Grant of Review After this Court decided Ardon on July 25, 2011, the Court of Appeal asked the McWilliams and Granados parties to submit supplemental briefing on the impact of that decision on those cases. Granados, like Ardon, involved no local claiming ordinance andthe parties essentially agreed to remand to the trial court. Long Beach, however, asserted its local ordinances. In an unpublished March 28, 2011 decision, the Court of Appeal reversed the trial court’s dismissal of the first four causes of action 10 111688.5 and affirmed its dismissal of the two remaining, concluding the due process and writ claims were mooted by the availability of refund claims. The Court further concluded that the City “is not authorized under the Government Claims Act to establish its own claims procedure for TUT refunds.” (Opinion of the Second District Court of Appeal, Division Three, filed March 28, 2012 at p. 2) (hereinafter, “Opinion.”) The Court reasoned that a city ordinanceis not a “statute” within the meaning of Government Code § 811.8. On that basis, it concluded that city ordinances governing the refund of local taxes do not fall within § 905, subd. (a)’s exception to the Government Claims Act, which therefore preempts local claiming requirements in the context of claims for refunds of taxes, fees and assessments. (Opinion at pp. 7-12.) Although this decision rejected Batt v. City & County of San Francisco (2007) 155 Cal.App.4th 65 and the long line of authority it represents, it did not designate its decision for publication as Rule 8.1105, subd. (c) of the California Rules of Court would seem to require. In April 2012, the City petitioned for review of the questions stated above.In July 2012, this Court granted that petition. STANDARD OF REVIEW On appeal from an order of dismissal after an order sustaining a demurrer, review is de novo; a reviewing court exercises its independent judgment whetherthe complaint states a cause of action as a matterof law. (Stearn v. County of San Bernardino (2009) 170 Cal.App.4th 434, 439.) Of course, a reviewing court treats a demurrer as admitting all material facts 11 111688.5 properly pleaded. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The reviewing court does not, however, assume the truth of contentions, deductions, or conclusions of law. (Jd.) A court may also consider matters which may be judicially noticed. ([d., quoting Serrano v. Priest (1971) 5 Cal.3d 584, 591.) LEGAL DISCUSSION I. Long Beach’s Ordinances Do Not Permit Class Claims for Tax Refunds The Long Beach Municipal Code (“LBMC”) prescribes “procedures for the refund, rebate, exemption ... or adjustment of [a] tax, assessment, fee, or charge,” and claims for money or damages against the City related to taxes controlled by those ordinances are therefore exempt from the claiming requirements of the Government Claims Act. (See Cal. Gov. Code § 905, subd.(a).) A. LBMC Section 3.68.160 Does Not Permit Class Claims LBMC § 3.68.160, a provision of the City Code’s Utility Users Tax chapter, governs claims for refunds of telephone and otherutility taxes: A. Whenever the amountof any tax has been overpaid or paid more than onceor has been erroneously or illegally collected or received by the city clerk or city treasurer-city tax collector under this chapter [entitled “Utility Users Tax”], it maybe refunded as provided in this section. B. A service supplier may claim a refund ortake as credit against taxes collected and remitted the amount overpaid, paid more than once, or erroneously orillegally 12 111688.5 collected or received, whenit is established in a manner prescribed bythe city treasurer-city tax collector that the service user from whom thetax has been collected did not owethe tax; provided, however,that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the person required to collect and remit. C. No refundshall be paid underthe provisionsof this section unless the claimant established his or her right thereto by written records showing entitlementthereto. D. No refund shall be paid underthe provisions of this section unless the claimant has submitted a claim pursuantto this section. (CT 73; see also MJN Exh. G) (emphases supplied.) Thus, the City’s controlling ordinance says nothing about class claims and cannot be construed to allow them. Rather, it is clear that “the claimant” mustestablish “his or her right [to a refund] by written records” (LBMC § 3.68.160(C)) and that “[nJo refund shall be paid under the provisions of this section unless the claimant has submitted a claim pursuant to this section.” (LBMC § 3.68.160(D)) (emphasis supplied.) No reference is made to a class or representative claim. Thus, the City’s controlling ordinance does not authorize class claims for refundsof utility users taxes, including telephonetaxes. Appellant attempts to avoid the City’s ordinance altogether, claiming subdivision (B) limits the refund authorized by § 3.68.160 to service suppliers, creating a void as to telephone customers which the Government Claims Act (or due process) mustfill. This wishful reading 13 111688.5 completely ignores subdivisions (A), (C) and (D) of § 3.68.160. While subdivision (B) refers to the defined term “service supplier,” subdivision (A) allows “any tax” to be refunded “as provided in this section.” (Emphases supplied.) Subdivisions (C) and (D) explain what “a claimant” must do to be “refunded as provided in this section.” In other words, to submit a refund claim under § 3.68.160, Appellant need only submit a claim with written records establishing his right to a refund pursuant to subdivisions (C) and (D). That subdivision (B) refers only to service suppliers does not nullify the remaining subdivisions of § 3.68.160.% B. Appellant Fares No Better Under the City’s General Claiming Ordinances Even were LBMC § 3.68.160 limited to service suppliers, LBMC §§ 3.48.060 and 3.48.070 — sections of the general “Claims and Refunds” 13 Section 1.08.010 of the LBMC provides general provisions and definitions that “shall govern the construction” of the LBMC. The LBMC’s provisions “are to be construed with a view to effect its objects and to promote justice.” (LBMC § 1.08.010, MJN Exh. D.) The City’s interpretation of § 3.68.160 — namely, that it provides both a general refund claiming process under subdivisions (A), (C) and (D) for individual refunds and a particular procedure for service supplier refunds under subdivision (B) — effects the objects of the refund section and promotes justice by ensuring that all parties subject to the City’s telephone tax have a refund remedy. Indeed, McWilliams argues the absence of a refund claim under his contorted reading of § 3.68.160 violates federal due process. 14 111688.5 chapter of the “Revenue and Finance” title of the City Code — would apply. The former authorizes refunds: Any refund made pursuantto this chapter must be authorized by the department head with the approvalof the city attorney or the city attorney and the city council, provided the refund is made within one(1) year after payment of the moneyto the city, or if an application for a refund is filed by the person entitled to the money, the application therefor mustbe filed within such one-year period.” (CT 74; see also MJN Exh.F) (emphasis supplied.) Like § 3.68.160, this section does not authorize class claims; it plainly contemplates a refund being filed by a “person entitled to the money.” Moreover, it does not use the term “service supplier,” much less limit refunds to service suppliers. Section 3.48.070 confirms the availability of a refund remedy: 14 Section 3.48 of the LBMC does not define “person,” but § 1.08.130.R does: ““Person’ means any natural person, firm, association, joint venture, joint stock company, partnership, organization, club, company, corporation, business trust or the manager, lessee, agent, servant, officer or employee or any of them, except as otherwise provided in this Code, or where the context clearly requires a different meaning.” (Id., MJN Exh. E.) This definition plainly contemplates individuals rather than a claimantclass. 15 111688.5 If any ordinanceof the city or any law applicable thereto expressly authorizes, in certain contingencies, the making of a refund of money paid to the city or prescribes the procedure therefor, such ordinance shall control in making the refund. The council declares thatits intent, in adopting this chapter, is to provide for the making of refunds of moneypaidto the city, under the conditionsset forth in this chapter, not otherwise expressly prohibited by any ordinance or law applicable to the city or not otherwise expressly authorized by such ordinanceor law. (Id., MJN Exh.F.) This makesclear that chapter 3.48 is intended as a safe- harbor to ensure that a remedy will alwaysbe available to all entitled to a remedy by due process.In light of that plainly stated intent, no court need ever resort to its equitable power to fashion a remedy to satisfy due process. McWilliams’ contrary claims are wishful thinking. C. Interpreting City Ordinances to Authorize No Tax Refund Violates Principles of Statutory Construction Where possible, courts construe ordinances — like statutes — to avoid constitutional issues. (Stolman v. City of Los Angeles (2003) 114 CaLApp.4th 916, 928 [courts interpret ordinances as they construe statutes]; Vo v. City of Garden Grove (2004) 115 Cal._App.4th 425, 446 [where two interpretations of an ordinance are possible, courts will choose that which renders the ordinance constitutional]; D’Amico v. Board of Medical Examiners (1970) 6 Cal.App.3d 716, 726 [“[t]he court should not espouse an interpretation which invites constitutional difficulties.”].) Here, by arguing 16 111688.5 that the City provides a refund process only for service suppliers, Appellant wants to have his cake and eat it, too. The City’s ordinances would be unconstitutional if they provided Appellant no post-deprivation remedy, yet Appellant strains to read them that way. It is preferable to avoid the constitutional issue that Appellant struggles to create by accepting the City’s interpretation of its own ordinances to allow individual taxpayers to claim refunds of erroneous or overpaid taxes. -As with statutes, a City’s interpretation of its ordinances is given considerable deference and must be upheld absent evidence that interpretation lacksa reasonable foundation. (Los Altos El Granada Investors v. City of Capitola (2006) 139 Cal.App.4th 629, 648 [construing mobile home rent control ordinance].) Where an agency’s interpretation has been consistently maintained andis of long standing, a court may consider that fact in determining the degree of deference owed that interpretation. (Van Wagner Communications, Inc. v. City of Los Angeles (2000) 84 Cal.App.4th 499, 509-510 [construing billboard ordinance].) Empowered by the voters who adopted its charter to implement, interpret and enforce local claiming procedures, the City has never interpreted § 3.68.160 or § 3.48.060 to authorize class claims. There is nothing in the record to the contrary. The City’s consistent interpretation is both reasonable and practical. As discussed in more detail below, Article XIIL § 32 protects the City Council’s legislative authority to control the manner in which tax refunds are sought. Deferring to the City’s longstanding interpretation of its tax refund ordinances permits the City 17 111688.5 sufficient notice of claims to allow for fiscal planning so it can avoid unforeseen impairment of its ability to finance police, fire, streets, parks and other essential local services to the residents and property ownersit serves. The Court should therefore defer to the City’s interpretation of its own ordinances, and conclude the applicable City ordinances bar class claims. Hl. Government Code Section 905, subd. (a) Authorizes Local Tax Refund Requirements The Government Claims Act establishes the general rule that a claim must be filed to pursue monetary relief against a California government agency; however, § 905, subd. (a) excepts from the Act’s scope: Claims under the Revenue and Taxation Code or other statute prescribing proceduresfor the refund, rebate, exemption ... or adjustmentof any tax, assessment, fee or charge.... (Cal. Gov. Code § 905, subd. (a).) Appellant, however, would persuade this Court that “statute” as used in § 905, subd. (a) does not include local ordinances because§ 811.8 limits the term to state and federal legislation. To the contrary, however, the Legislature has preserved the powerof both general law and charter cities to adopt local claiming requirements appropriate to their circumstances. This is reflected by the legislative history of § 905, subd.(a) and the text of the Government ClaimsActitself. 18 111688.5 A. The Legislative History of Section 905, subd. (a) Demonstrates That “Statute” Includes Local Ordinances In 1956, the Legislature authorized the Law Revision Commission (the “Commission”) to study the various provisions of law relating to the presentation of claims against public bodies and employees to determine whether they should be made uniform or otherwise revised. (2 Cal. Law Revision Com.Rep. (1959) p. A-1, attached to this Brief as an Appendix.1) There were then no fewer than 174 separate claims provisions scattered through state law and local charters and ordinances, differing widely as to information required, claims covered and timeforfiling claims. (Id., p. A- 7.) In 1959 the Commission proposed, and the Legislature adopted, A.B. 405 to standardize claiming requirements for claims against public entities for most, but not all claims. (Stats. 1959, Ch. 1724, § 1, at pp. 4133-4138, MJN Exh. H.) Thus came to be what is now the Government Claims Act. Tellingly, from the very first, claims for tax refunds were expressly exempted from the Act’s general claimingrules.(Id. at pp. 4133-4134.) In 1961 this Court decided Muskopf v. Corning Hosp. Dist. (1961) 55 Cal.2d 211, abolishing the rule of sovereign immunity and making a sea change in the law. The Commission spent all of 1962 revising the 1959 claims statute to address Muskopf, and in 1963 the Legislature adopted the Commission’s recommendations as the current Government Claims Act. This legislation was not intended to make any changein the scopeof the 15 2 Cal. Law Revision Com. Rep. (1959) is appended to this brief, pursuant to Rule of Court 8.520(h), for the convenience of the Court. 19 111688.5 powerto local governments to impose claiming requirements nor to bring tax refund claims within the Act. However, the legislation also unfortunately added — 4 years after it was first adopted as an integrated statute governing claims — definitions of such terms as “statute” to the Act without the time, care and caution necessary to do so in a thorough and careful way. Thus, the seeds of the current dispute were sown. I. The 1959 and 1963 Claiming Statutes Had Fundamentally Different Objects and Each Uses “Statute” Differently In concluding the term “statute” excludes local enactments, the Court of Appeal in this case observed that in 1959, the Legislature specifically rejected a Commission proposal that used the term “other uy provisions of law,” rather than “statute” in former Government Code § 703, the precursor to today’s § 905, subd. (a). (Opinion, p. 10.) The court assumedthat in 1959 the Legislature used the term “statute” as it would be defined four years later in Government Code § 811.8; in other words, to include only enactments of the California Legislature or of Congress, and to exclude local enactments. This, of course, is ahistorical and error. Government Code § 811.8, with its narrow definition of the term “statute,” was not adopted until 1963 — four years after the 1959 claiming statute was enacted — and with a very different object in mind. (Stats. 1963, ch. 1681, p. 3267, MJN Exh. I.) To conclude otherwise neglects the basic principle of statutory interpretation that “[t]he words of a statute are to be interpreted in the sense in which 20 111688.5 they would have been understood at the time of the enactment.” (People v. Cruz (1996) 13 Cal.4th 764, 775.) 2. The 1959 Legisiature and Contemporaneous Courts Understood “Statute” to Include Local Ordinances and Charter Provisions While “statute” was not defined by the government claims law enacted in 1959, the legislative history of that act shows the Legislature understood the term to embrace claim presentation requirements provided in state as well as local laws. Most notably, the 1959 Commission report, which constitutes the legislative history of that act,© defines “claims statutes” to include locallegislation: There seems to be no adequate generic wordfor referring collectively to statutes, city charters and ordinances. Since claims are governed by legal requirements of all three types, the phrases ‘claimsstatutes’ and ‘claims provisions’ are used interchangeably herein to refer to all forms of legal claim presentation requirements as Class. | (2 Cal. Law Revision Com. Rep. (1959) at p. A-18, attached at Appendix.) Thus, the 1959 legislation used “statute” in what is now § 905, subd.(a) to 16 The appellate courts long ago identified this report as the legislative history of what is now the Government Claims Act. (Pasadena Hotel Dev. Venture v. City of Pasadena (1981) 119 Cal.App.3d 412, 415 fn.3.) 21 111688.5 mean “all forms of legal claim presentation requirements” including local charters and ordinances. Contemporary judicial opinions also used “statute” to include local claiming provisions. (See Parodi v. City & County of San Francisco (1958) 160 Cal.App.2d 577, 580; Cruise v. City & County of San Francisco (1951) 101 Cal.App.2d 558, 562-564; Germ v. City & County of San Francisco (1950) 99 Cal.App.2d 404, 413-414.) This underscores the Commission’s observation that there was in 1959 “no adequate generic wordfor referring collectively to statutes, city charters and ordinances”establishing claim requirements. Additionally, the Office of Legislative Counsel’s Report on the final version of the 1959 statute stated that tax claims were excluded from the scope of the statute. (Office of Legislative Counsel’s Report, at p. 1, MJN- Exh.J.) That Report explained that the new law: Exempts certain claims for money, including claimsrelated to taxes, salaries and wages, workmen’s compensation, unemployment insurance, public assistance, bonds and other such matters. (Id. at p. 1) (emphasis supplied.) 3. The 1963 Legislature Had NoIntent to Displace Local Claiming Requirements The Legislature’s intent with regard to former § 703, subd. (a) — the 1959 predecessor to 1963's (and the present’s) § 905, subd. (a) — wasto exclude all tax claims from this new “unified claims statute:” With respect to this former subdivision, the Law Revision Commission hasstated that it excluded from the scopeof the unified 22 111688.5 claims statute then proposed by the Commissionall ‘claims for tax exemption, cancellation or refund.’ (See 2 Cal. Law Revision Com. Rep.(1959) p. A-117.) (Pasadena Hotel Dev. Venture v. City of Pasadena (1981) 119 Cal.App.3d 412, 415 fn. 3 [emphasis supplied].) When the Commission recommended renumbering this provision as § 905, subd. (a) in 1963, it explained “[t]his section is the same in substance as Government Code Section 703.” (4 Cal. Law Revision Com. Rep. (1963), Recommendation Relating to Sovereign Immunity No. 2, p. 1027, MJN Exh. L.) Likewise, the Commission explained that, with a minor exception not pertinent here, § 935, authorizing local claiming requirements, was the same as former § 730.(Id. at p. 1040.) Thus, the 1963 enactment of the present version of these sections was not intended to change the meaning of the 1959 statute — which excluded all tax claims for which alternative claiming procedures were provided — whether those claiming procedures derived from state or local law. This intent is notwithstanding the 1963 addition of § 811.8’s definition of “statute,” a point to which we now turn. When the Commission recommended, and the Legislature adopted, the current Government Claims Act in 1963, those bodies were focused on the creation of the substantive laws of public liability, not on the unified claims procedure created four years earlier. Their new and focused attention to the substantive law of public liability was prompted by Muskopf v. Corning Hosp. Dist. (1961) 55 Cal.2d 211, an earthquake in the law that abolished sovereign immunity, a doctrine of sufficient antiquity 23 111688.5 that it had a Latin label: Rex non potest peccare — The King can do no wrong.” In the Commission’s words: Since the decision in the Muskopf case, the Commission has devoted substantially all of its time during 1962 to the study of sovereign or governmental immunity. (4 Cal. Law Revision Com. Rep. (1963), Recommendation Relating to Sovereign Immunity No.1, at p. 803, 809, MJN Exh.K.) In 1963, as the Commission recommended, the Legislature reenacted most of the 1959 provisions — including former section 703 — in substantially the same form, stating no intent to change the substance of the 1959 unified claims law. (See Pasadena Hotel, supra, 119 Cal.App.3d at 415 fn. 3.) Rather, the Legislature and the Commission focused in 1963 on the creation of coherent law defining government immunities and liabilities post-Muskopf. Thus the topic of 1959 was unified claiming procedures; the topic of 1963 wasclarifying the substantive law of public agencyliability. The 1963 Commission’s task was formidable; even before Muskopf, governmental immunity and liability in California had hardly been clear- cut. As the Commission noted, the pre-Muskopflegislation on the topic: expresses a variety of conflicting policies. Some statutes create broad immunities for certain entities and others create wide areas of 17 Black’s Law Dictionary (5'* ed. 1979) at 1188. Black’s elaborates the point: “An ancient and fundamentalprinciple of the English constitution.” (Id.) 24 111688.5 liability. Some apply to many public entities and others apply to but one. In some cases, statutes expressing conflicting policies overlap. Even wherestatutes imposeliability on public entities, they do so in a variety of inconsistent ways. Someentities are liable directly for the negligence of their employees .... Where statutes are not applicable, the courts have determinedliability on the basis of whether the injury was caused in the course of a governmental or proprietary activity.... Even where a public entity is immune from liability for a negligent or wrongful act or omission, the public employee whoactedorfailed to act is often personally liable; and many public entities have assumedthe cost of insurance protection for their employees against this liability. (4 Cal. Law Revision Com. Rep. (1963), Recommendation Relating to Sovereign Immunity No. 1, pp. 807-808, MJN Exh.K.) Given the scope and complexity of the Commission’s task — to create a comprehensive, unified liabilities statute out of an incoherentlegal landscape — it is hardly surprising that the resulting legislation was explicit about who was liable, who was immune and under what circumstances, but made no change to claiming requirements. This historical context explains why the 1963 Legislature distinguished among “enactment,” “statute,” “law” and “regulation” in amending the Government Claims Act. (See Cal. Gov. Code §§ 810.6, 811.8, 811, and 811.6 [defining these terms].) Those termsare critical to interpreting many of the liability and immunity provisions in the new statute even as they were 25 111688.5 unnecessary to the codification of claiming rules four years earlier. It is, of course, a basic rule of the modern Act that governmentliability does not exist by commonlaw, but must be premised in legislation. As Government Code § 815 states: “Except as otherwise providedby statute ... [a] public entity is not liable for an injury ...” Given this fundamental rule, a clear definition of “statute” was plainly required. Section 811.8’s definition was adopted for that purpose, not to narrow the scope of § 905, subd. (a)’s direction that tax refund claims be governed by tax laws rather than the Government ClaimsAct. Of course, the goal of the 1959 legislation was a uniform claiming process, but not as to taxes: Provisions governing claims for refund of taxes, assessments,fees, etc. ... are frequently integrated with special procedures governing the assessment, levy and collection of revenue. They are separate and independentfrom the tort and contract claims provisions and do not create problems of the same nature and significance as the claim provisions embracedbythereport. (2 Cal. Law Revision Com. Rep.(1959), at p. A-17, attached at Appendix.) Thus, the 1959 and 1963 statutes had different objects and the 1963 amendments had absolutely nothing to do with the scopeof claiming procedures — those were intended to be unchanged. The conclusionsof the Court of Appeal below in Oronoz andin this case then, are error. 26 111688.5 B. The Claims Act and Other Statutes Underscore the Diversity Among State-Regulated Local Taxes the Legislature Finds Appropriate I. The State Has Provided Claiming Requirementsfor State and Local Taxes and Has NotRelied on the Government Claims Act to Do So Section 905, subd.(a) is itself evidence that uniformity was not desired for tax refund claims. The Legislature has provided notfor uniformity in local tax refund claim procedures, but for diversity. This legislative policy is evidenced by the manytax statutes prescribing different claim presentation periods, statutes of limitations, and requirements for the contents of a claim.18 For example, Revenue and 18 The following, non-exhaustive list of sections from the Revenue and Taxation Coderelating to local taxes demonstrates the point: § 255 (a) (taxpayer mustfile affidavit attesting to facts giving rise to most property tax exemptions); | § 255 (b) (taxpayer mustfile affidavit attesting to facts giving rise to homeowner's property tax exemptions); § 4985 (procedures for cancellation of illegal or otherwise defective tax or charge); § 5096 (presentation of claim for refund of property tax); § 6933 (suit for refund of sales or use tax must be commenced within 90 days after board’s notice of action on claim); § 10901 (application for refund of local vehicle license fee must be made within three years of payment); 27 111688.5 Taxation Code §§ 5097 and 5140 outline proceduresfor refundsof property taxes. Similarly, Business and Professions Code § 5499.14 allows local legislative bodies to order refunds of assessmentsfor illegal advertising displays. Different taxes require different refund procedures, a fact demonstrated by the diversity of state tax refund procedures and the Legislature’s decision that the Claims Actis notitself sufficient to address them. There is no policy rationale to impose a forced simplicity on local governments that the Legislature thought inappropriate for the State and for the local taxes the Legislature has addressed directly. In particular, local government musttailor refund ordinances to the manner in which taxes are collected. For example, procedures for refunds of taxes collected from the taxpayer and remitted to the taxing agency by third parties (e.g., hotel bed taxes, parking taxes, sales taxes, and utility user taxes) necessarily differ from those for refunds of taxes paid directly to government (e.g., income taxes, business license taxes, and property taxes). This reflects the necessity to ensure that a refund is made only once andto the proper party, and that the collector with the records on which to base a refund claim is involved in determining its validity and amount. These tax refund procedures, tailored to the tax in issue, promote the policy of stability and certainty in the resolution of tax disputes. (Cf IBM Personal Pension Plan v. City & County of San Francisco (2005) 131 Cal.App.4th 1291, 1305 [requirement that only taxpayer may file a § 11934 (claims for refund subject to provisions for property tax refund claims under Revenue & Taxation Code § 5096). 28 111688.5 property tax refund claim avoids disputes as to party entitled to refund].) It would disserve these vital public policies to construe legislative silence as reflecting intent to impose on local tax refund claims the one- size-fits-all rule of the Government Claims Act, which the Legislature expressly found unsuited to claims for refund of taxes paidtothestate. 2. The Legislature Has Long Relied Upon Local Governments to Regulate Local Taxes Asto taxes enacted and enforced entirely at the local level, state law is silent — not because Government Code § 910 was intended to apply, but because it was understood that local legislation controlled claiming procedures by virtue of § 905, subd.(a). This is evidenced by the fact that the Legislature has enacted enabling legislation for local taxes without enacting specific procedures for refund, as it has done for state taxes and for those local taxes it does regulate in substantive detail. For example, § 799 was addedto the Public Utilities Code (“PUC”) in 1996; that statute immunizes utilities from liability to customers for collecting local utility taxes, and requires local taxing agencies to give sufficient notice to utilities before obligating them to collect new or increased taxes. (Id.) The statute thus enables local agencies’ collection of such taxes by regulating how they may do so, but does not provide specific procedures for refunds. When PUC § 799 was enacted, existing court decisions enforced local refund claim procedures. (E£.¢., Volkswagen Pacific v. City of Los Angeles (1972) 7 Cal.3d 48, 60-63 [enforcing municipal ordinance regarding claims presentation requirements for tax refunds].) 29 111688.5 Given that the Legislature is presumed to be aware of relevant appellate court decisions when enacting legislation or amending statutes (420 Caregivers, LLC v. City of Los Angeles (2012) 207 Cal-App.4th 703, 738, pet’n rev. pending), PUC § 799 assumed the existence of procedures for claims and refund suits enacted at the local level. Put differently, if the Legislature disagreed with the case law assigning the responsibility to local governmentto establish claiming procedures, it would have said so.If it thought that § 905, subd. (a) forbade local claiming rules, it would have provided its own,as it has done in other statutes governing state and local taxes. Likewise, Revenue & Taxation Code § 7280 authorizes cities and counties to levy “transient occupancy” or “bed” taxes. (Id. at subd. (a).) Like PUC § 799, this § 7280 enables local taxes but is silent as to refund procedures. Again, the Legislature left to local governments to establish claiming proceduresfor such taxes tailored to their own needs. C. The Government Claims Act Definitions Do Not Apply “Where the Provision or Context Otherwise Requires” Moreover, the text of the Government Claims Act authorizes this Court to apply § 811.8’s definition of “statute” so as to protect the Legislature’s intent with respect to the scope of § 905, subd.(a). Section 810 of the Government Code limits the sweep of all the Act’s definitions, including § 811.8’s definition of “statute,” as follows: Unless the provision or context otherwise requires, the definitions contained in this part govern the construction of this division. 30 111688.5 (Cal. Gov. Code § 810 [emphasis supplied].) Here, “the context otherwise requires” that a local ordinance be a “statute” within the meaning of § 905, subd. (a), notwithstanding the contrary definition of § 811.8. The 1959 legislative intent that this be so is plain, as is the 1963 intent to leave the 1959 claiming rules unchanged. Moreover, the Government Claims Act uses the defined terms “statute,” “regulation” and “enactment” so irregularly and inconsistently that the Court should heed the Legislature’s caution that those definitions be used only when context allows. Applying a definition to determine the scope of a statutory provision should be straightforward; but is not always so, and is not so here. Statutory language that appears unambiguous on its face may be ambiguous when read in context. (Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) 53 Cal3d 245, 249.) Careful review of the Act — including its provisions authorizing alternative claim procedures — demonstrates that the Act’s use of defined terms like “statute” (§ 811.8), “enactment” (§ 810.6) and “regulation” (§ 811.6) — each denoting the product of different legislators — are contradictory and haphazard, yielding anomalous results if those words are consistently interpreted according to the definitions added to the Act four years after its adoption. Weprovide two examples: First, § 935, subd. (a) authorizes local public entities to enact claim procedures. It refers to such procedures “prescribed in any charter, ordinance or regulation adopted by the local public entity.” (Gov. Code § 935, subd.(a).) But § 811.6 defines “regulation” as a rule, regulation, or 31 111688.5 standard adopted by the United States or an agency of the State underthe federal or state Administrative Procedure Act. Accordingly, local public entities cannot enact “regulations.” (Gov. Code § 811.6; see also Gov. Code § 11342.600 [defining “regulation” under the Administrative Procedure Act as one adopted by a “state agency”].) Therefore, § 935(a)‘s authorization for local claiming requirements prescribed by “regulation”is meaningless unless one follows the directive of §810 to construe the statute in light of § 811.6’s definition only whenthe context and apparent intent of the Legislature permit. Plainly, “regulation” has a different meaning in § 935, subd. (a) than that supplied by § 811.6. It would be anomalous, of course, for a statute to authorize a public entity to do something that it cannot do, and such anomalous interpretations are to be avoided. (Horwich v. Superior Court (1999) 21 Cal.4th 272, 280.) An interpretation rendering part of a statute meaningless — here, the authority to enact “regulations” — is to be avoided. (Hassanv. Mercy Am. River Hosp. (2003) 31 Cal.4th 709, 715-716.) This use of “regulation” in § 935, inconsistent with that term’s definition in § 811.6, suggests that the definitions at the beginning of the Government Claims Act cannot apply to § 935 and § 905 (which § 935 references), which together addresslocal tax refund claiming provisions. ° Section 811.6 previously included local government regulations within its definition, but that section was amended in 1987 to exclude them.(Stats. 1987, ch. 1201, § 14; Stats. 1987, ch. 1207, § 3). 32 111688.5 The imprecise use of defined termsis not unique to § 935. A second example is found in the Act’s provisions regarding litigation conflicts between public entities and their employees. The illogical use concerns the term “statute,” the term of concern here. Section 995.2, subd. (a) authorizes a public entity to refuse to defend an employee whosepositionin litigation conflicts with the agency’s. Such is the case, for example, when a law enforcement agency defends a civil rights claim by arguing a defendant peace officer used excessive force in violation of agency policy and was acting outside the scope of employment, immunizing the agency from liability. Section 995.2 defines the necessary conflict of interest to allow an agency to refuse to defend its employee as “a conflict of interest or an adverse or pecuniary interest, as specified by statute or by a rule or regulation of the public entity.” (Id.) (emphasis supplied.) Section 811.2 defines “public entity” to include local governments. Thus, a “public entity” — including a local government — has three means to identify conflicts of interest that entitle it to refuse to defend an employee:a statute, a regulation or a rule. However, the Act's definitions of “statute” (§ 811.8) and “regulation” (§ 811.6) exclude local legislation. Again, a provision of the Government Claims Act authorizes local governments to do what the definitions of the Act, if taken literally, bar them from doing. Still further, the plain intent of the Legislature can be accomplished only by disregarding the Act’s definitions of “statute” and “regulation” when construing § 995.2 — as § 810 directs — because “the provision or context otherwise requires.” 33 111688.5 If “statute” and “regulation” are read to exclude local ordinances and charter provisions (the result Appellant urges here), then local governments would be forbidden to identify conflicts of interest by ordinance or charter provision despite the apparent intent of § 995.2 to the contrary. The goal of statutory interpretation is to “ascertain the intent of the Legislature so as to effectuate the purposeof the law.” (Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 977.) Therefore, applying § 811.8’s definition of “statute” and § 811.6’s definition of “regulation” to § 935, subd. (a) and § 995.2 is inappropriate. It is equally inappropriate to apply § 811.8’s definition of “statute” to § 905, subd. (ays exemption from the Government Claims Act for tax refund claims to which another “statute” applies. While the Government Claims Act can plainly use the tender ministrations of a Committee on Third Reading, this Court should not reach a result that contradicts the Legislature’s purpose to confirm local government authority over tax refund claiming procedures rather than to displaceit. Given the constitutional grants of power to charter and general law cities, and in light of the compelling policy reasons for diverse tax refund procedures, the legislative intent to exempt local tax refund claims from the Government Claims Act made manifest by legislative history from 1959 and 1963 makes good public policy, too, reinforcing the conclusion that the ordinances in issue here are enforceable and that McWilliams’ class claim mustfail. 34 111688.5 lil. Local Claiming Authority is of Long Standing and Reflects Fundamental Public Policies A. . This Court’s Precedents Preserve Long-Established Local Legislation Governing Tax Refund Claims I. Volkswagen Pacific Enforced a Local Ordinance Appellant cites Volkswagen Pacific v. City of Los Angeles (1972) 7 Cal.3d 48 to support his claim that local enactments are not “statutes” within the meaning of § 905, subd. (a). Volkswagen Pacific addressed the limitations period applicable to a claim for refund of an allegedly invalid municipal tax. There, this Court determined that a six-month limitations period applied under Government Code § 945.6, and its conclusion did not depend uponits interpretation of § 905, subd.(a). (Id. at 62-63.) The Court reasonedthat if the § 905, subd. (a) exception did not apply so as to make Los Angeles’ local claiming requirement applicable, then § 945.6 would supply a six-month’s limitations period under the Government Claims Act’s general rule. On the other hand, if the § 905, subd. (a) exception did apply, then the § 945.6 limitation wasstill applicable, by operation of § 935, which authorizes local claiming ordinances, because § 935 provides that local claiming requirements are subject to the limitations period set forth in § 945.6. (Id. at 62-64.) In dicta,*° however, the Court applied § 811.8’s definition of “statute” to the construction of § 905, subd. (a). Application of this definition rested °° Both the First and Second Districts have concluded Volkswagen 35 111688.5 upon the Court’s conclusion that “[t]here is nothing in the legislative history to suggest that ‘statute’ within section 905, subdivision (a), is to have a special meaning uniqueto that section.” (Volkswagen Pacific, 7 Cal.3d at 62.) With respect, however, the City submits that the legislative history outlined above, which was apparently not briefed to the Volkswagen Pacific court, is plainly to the contrary. Nevertheless, the Court in Batt v. City & County of San Francisco (2007) 155 Cal.App.4th 65, 83-84 (hereinafter, “Batt”) persuasively explains whythis language wasdicta: [T]he language in Volkswagen Pacific on whichplaintiff relies was dictum,as plaintiff herself expressly acknowledges. Perhaps more importantly, that dictum cannot support plaintiff here, becauseif it meant whatplaintiff claims it meant, the Supreme Court would have invalidated the Los Angeles ordinance, which it did not do. And most importantly, plaintiff's argumentis belied by the many cases that have dealt with local ordinancesin tax refund cases, illustrated best by Volkswagen Pacific itself, which enforced a Los Angeles municipal ordinance requiring pre-suit filing of a claim for refund of a local tax. (Id.) (emphasis supplied, footnotes and internal citations omitted.) Pacific's discussion of Los Angeles’ authority to adopt a local claiming requirement is dicta. (Batt v. City & County of San Francisco (2007) 155 Cal.App.4th 65, 83-84; Howard Jarvis Taxpayers Assn. v. City of Los Angeles (2000) 79 Cal.App.4th 242, 249.) 36 111688.5 Moreover, Volkswagen Pacific notes the relevance of the legislative history of § 905, subd.(a), yet it does not consider (and does not indicate that it was aware of) the comments of the Law Revision Commission that persuaded the Court of Appeal in Pasadena Hotel Dev. Venture v. City of Pasadena (1981) 119 Cal.App.3d 412 that municipal tax refund ordinances are protected rather than preempted by § 905, subd.(a). In Pasadena Hotel, the Court of Appeal examined the scope and legislative history of § 905, subd.(a) and noted that subdivision (a)is: essentially a copy of former section 703, subdivision (a) also drafted by the Law Revision Commission....With respect to this former subdivision, the Law Revision Commissionhasstated thatit excluded from the scope of the ... statute then proposed by the Commissionall ‘claims for tax exemption, cancellation or refund.’ Since both subdivisions ... were enacted in the form proposed by the commission, the intent of the commission in regard to their meaning may be deemedto be the intent of the Legislature. (Pasadena Hotel, 119 Cal.App.3d at 415, fn. 3 [internal citations omitted].) Based uponthis legislative history, the Court of Appeal concluded “[t]he reference in this subdivision to ‘the Revenue and Taxation Code or other statute’ is not a limitation upon the type of tax claims excepted” from the Government Claims Act. (Id., emphasis supplied.) Pasadena Hotel therefore held that the § 905, subd. (a) exception allows a municipal ordinance to supply tax-refund claiming requirements that displace those of the Government Claims Act. 37 111688.5 Indeed,in at least three cases — Volkswagen Pacific, H]JTA v. City of La Habra, and Ardon — this Court has been careful not to invalidate local tax refund provisions. In Ardon, this Court was careful to distinguish rather than disavow Batt. (Ardon, supra, 52 Cal. 4th at 250.) In Volkswagen Pacific, as discussed above, the Court applied rather than rejected Los Angeles claiming requirement. In HJTA v. City of La Habra (2001) 25 Cal.4th 809, a taxpayer association sought a declaration invalidating the City’s utility users tax, an injunction against its enforcement, and a writ compelling the city to cease collecting it. (Id. at 813.) This Court ruled on a statute of limitations issue, and declined to resolve the substantive merits of plaintiff's claims or the merits of similar claims against othercities. (Id. at 825.) The issue whether local tax refund claim provisions are permitted has not been squarely presented by these prior cases, and this Court therefore has not ruled on that issue, much less taken the drastic step of invalidating local provisions across the state. Rather, the rule favoring local control of procedures to refund local taxes is reflected in decisions of the Courts of Appeal andin the legislative history outlined above. 2. OronozIs the Only Case To the Contrary and Has Since Been Repudiated By the Panel That DecidedIt The only case to ever find § 905, subd. (a) to preempt local claiming ordinances is Oronoz (2008) 159 Cal.App.4th 353, and that case was promptly abandonedbythe very panelthat decidedit, althoughits decision to do so wasvitiated by this Court's grant of review and decision on other grounds in Ardon. (See Ardon v. City of Los Angeles (2009) 174 38 111688.5 Cal.App.4th 369, review granted and opinion superseded, (Cal. 2009) 99 Cal.Rptr.3d 869 and rev’d, (2011) 52 Cal.4th 241.). Preciouslittle supports McWilliams’ claim in this Court! While Oronoz concludes that local enactments are not “statutes” under § 905, subd.(a), Batt holds otherwiseand this Court distinguished — rather than rejected — Batt and the line of cases on whichit relies in Ardon. The City respectfully submits that Oronoz is error that this Court should correct. B. Public Policy Compels Legislative Authorization for the Refund of Local Taxes The City’s view of the scope of § 905, subd. (a) reflects established precedent. (E.g., Batt v. City & County of San Francisco (2007) 155 Cal.App.4th 65, 77-78 [hereinafter, “Batt’].) In Batt, the First District Court of Appeal relied on the City of San Francisco’s ordinance — which prohibited class claims for tax refunds — to uphold a grant of the City’s demurrer and to conclude that a class claim for refund of bed taxes was not permitted. (Id. at 78-79.) Batt was not the only case where a court determinedthat a claim for refund of local taxes was subject to a local claiming requirement. In Flying Dutchman Park, Inc. v. City & County of San Francisco (2001) 93 Cal.App.4th 1129, a corporate taxpayer sued the City of San Francisco, challenging the imposition of a parking tax on constitutional and other grounds. Thetrial court dismissed the suit because the plaintiff failed to pay the disputed tax before filing its action. (Id. at 1132.) In affirming, the First District Court of 39 111688.5 Appeal applied San Francisco Municipal Code provisions imposing the “payfirst, litigate later” rule. (Id. at 1139.) Likewise, in Howard Jarvis Taxpayers Assn. v. City of Los Angeles (2000) 79 Cal.App.4th 242, a taxpayer association challenged an ordinance that extended Los Angeles’ business tax and imposed an annual registration fee on those engaged in home-based occupations. (Id. at pp. 244-245). The Second District enforced Los Angeles Municipal Code provisions that precluded the association from pursuing refunds for individuals who failed to file refund claims —the issue contested here.(Id. at 249, fn.5.) Each of these cases cites a wealth of prior authority imposing claiming requirements on those whoseek tax refunds, barring class refund claims, and enforcing the “pay first, litigate later” rule. These rules have common public policy bases: the need for government to predict its revenues and paymentobligations so that it can provide stable funding for essential public services. Batt, supra, 155 Cal.App.4th at 71-72, concisely summarized public policies that lie at the heart of legislative control of the process by which claimsfor refundsoftaxes are asserted: {[M]Joneyis the lifeblood of modern government. Money comes primarily from taxes, and, as the importance of a predictable income stream from taxes has grown, governmentsat all levels have established procedures to minimize disruptions, primary among whichis the condition precedent that a tax may be challenged only after it has been paid. Stated otherwise, preemptive, precollection, or 40 111688.5 prepayment lawsuits are, with a few exceptions not presenthere, not permitted. This principle is generally known asthe‘payfirst, litigate later’ rule, and it applies at all levels of government — the federal ... the state ... and the local.” (Id.) (emphasis supplied and footnote and internal citations omitted.) Stated otherwise, the “pay first, litigate later” rule allows local governments to plan their finances and to avoid disruptions in funding of their essential services. The reason for the rule is obvious: government could scarcely function, and courts would be overwhelmed, if every taxpayer could attain hold-up leverage over the municipal fisc simply by paying a filing fee in Superior Court. C. For Similar Reasons, the Powerful and Expensive Class Action Remedy Is Not Appropriate in the Tax Refund Context The class action remedy, with its generous enticement to successful plaintiffs’ counsel via perhaps a one-third share of the recovery, is needed to incentivize correction of civil wrongs involving many plaintiffs, but small stakes. The remedy forces a civil miscreant to disgorge an ill-gotten gain and socializes the remedy for general benefit. However, the tax system is itself a means to collectivize the benefits and burdens of civil society.2! A refund to an individual mistakenly 1 As Oliver Wendell Holmesputit 85 years ago: “Taxes are what we pay for civilized society ....” Compania Gen. de Tabacos de Filipinas v. Collector Al 111688.5 overtaxed restores the balance the taxing legislature intended as between the individual and society. By contrast, a class reward and the ample attorney's fees commonly associated with it can only comeat taxpayers’ — and thus society's — expense. Thus, applying the class remedy in this context creates an incentive to diminish the capacity of government to fund services for the collective benefit and to reward individuals at the expense of taxpayers for whom they claim to act. It impoverishes the collective and enriches the individual — precisely the opposite effect of the class action remedy whenapplied to private, profit-making defendants. I. The Law Provides Ample Remedies to Correct Tax Errors Without Class Actions Nor is the class action remedy needed, as federal and state law provide ample remediesfor tax errors. Here, for example, post-deprivation relief is available to Appellant. He filed an administrative claim, and upon its denial, sued. If the City’s telephone tax is eventually held to be invalid, the City will be compelled to satisfy timely refund claims. Moreover, other taxpayers would havethe benefit of the result under the rules of issue and claim preclusion and stare decisis and under the force of any mandatory relief resulting from the case. That is more process than due under McKesson v. Division of Alcoholic Beverages & Tobacco (1990) 496 U.S. 18 on which Appellantrelies.” Appellant cites no authority for the proposition — of Internal Revenue, 275 U.S. 87, 100 (1927) (Holmes,J., dissenting). 22 In contrast to the case at bar, a refund in McKesson was denied as 42 111688.5 that due process demandsclass relief, because there is no such authority. Indeed,there is no constitutional requirement that McWilliams be allowed to serve as a “general[] at the head of an army.” (Farrar v. Franchise Tax Board (1992) 15 Cal.App.4th 10, 21.) Moreover, Appellant's position gives no swayto article XIII, § 32 as this Court construed it in Woosley. A class claim for a tax refund is permitted only where there has been express legislative authorization, and this rule does not violate due process. In addition, aggrieved taxpayers are protected by HJTA v. City of La Habra (2001) 25 Cal.4th 809, 812 holding that as-applied challenges to taxes accrue with each paymentof tax, thus avoiding the time-bar applicable to facial challenges. Thus, prospective relief as to an illegal tax is available essentially without a timebar. to a tax a court had invalidated. McKesson recognizes that “all that due process requires is that the state provide its taxpayers with a fair opportunity to challenge the accuracy and legal validity of their tax obligation and a clear and certain remedy.” (Neecke v. City of Mill Valley (1995) 39 Cal.App.4th 946, 965.) Here, the validity of the City’s telephone tax has not been adjudicated, and the City has not denied timely refund claims with respect to any tax that has been invalidated by any court. Nor would it do so. 43 111688.5 2. Other States Preclude Class Actions in the Tax Refund Context These policy rationales for avoiding the class action remedy in the tax refund context have proven persuasive in our sister states. For example, New York courts hold that the “class action is not considered the superior method for the fair and efficient adjudication of a controversy against a governmental body.” (Jones v. Bd. of Educ. ofWatertown City School Dist. (N.Y. App. Div. 2006) 30 A.D.3d 967, 970; 816 N.Y.S.2d 796, 799 (citation omitted).) Under New York’s “governmental operations rule,” class action challenges to the operations of government are barred, including those seeking tax refunds. (Neama v. Town of Babylon (N.Y. App. Div. 2005) 18 A.D.3d 836, 838; 796 N.Y.S.2d 644, 646 [refusing to certify class of garbage tax refund claimants under governmentoperations rule and because plaintiffs failed to prove absent class members filed tax protests]; see also LaCarruba v. Legislature of the County of Suffolk (N.Y. App. Div. 1996) 225 A.D.2d 671, 672; 640 N.Y.S.2d 130, 131 [“Wenotethata class action against a governmental bodyis not considered the superior method for the fair and efficient adjudication of a controversy because the doctrine of stare decisis would render the determination of an action binding on the governmental body and would automatically benefit all persons sought to be represented in the class.”]). | Thus, as the New York courts have observed, the efficiency of the class action remedy can be achieved by the rule of stare decisis and the powerful and expensive remedy of the class action is unnecessary as to government defendants. 44 111688.5 The Washington Supreme Court similarly emphasized that a statute providing for tax refunds must be narrowly construed to “protect the State from unanticipated losses” if the state were forced to respond to “unidentified refund appeals for unstated amounts.” (Lacey Nursing Center, Inc. v. Dep’t of Revenue (Wash. 1995) 905 P.2d 338, 343; 128 Wash.2d 40, 49- 50 (citation omitted).) The Washington court resolved the issue under the terms of the tax refund statute at issue, which required that a taxpayer sue for a refund butonlyif the taxpayer: 1) identified herself, 2) stated the amount of the allegedly overpaid tax which she concedesis correct, 3) stated the reasons whythe tax should be reduced or abated, and 4) provedthatthe tax paid wasincorrect. (Id. at 343, 128 Wash.2d at 50.) The court then concludedthat a class action for an excise tax refund could not be maintained to protect the public fisc and governments’ power to plan for financial claims and because the absent, unnamed class members could not comply with these requirements. A number of other states reach the same conclusion that class actions against taxes are unnecessary by construing statutory waivers of sovereign immunity, such as California’s Government Claims Act. These courts hold that tax refund class actions are not available unless claiming statutes expressly authorize them — the very rule of Article XIII, § 32 as explained by this Court in Woosley. (See, e.g., Pourier v. South Dakota Dept. of Revenue & Regulation (S.D. 2010) 778 N.W.2d 602, 606, 2010 SD 10, 414, citing Lick v. Dahl (S.D. 1979) 285 N.W.2d 594; State ex rel. Lohman v. Brown 45 111688.5 (Mo. Ct. App. 1997) 936 S.W.2d 607, 610, citing Charles v. Spradling (Mo. 1975) 524 S.W.2d 820 [statutory waiver of sovereign immunity is strictly construed and nostatutory authority for class tax refund claims appears]; Wicker v. Comm’r (Tenn. Ct. App. 2010) 342 S.W.3d 35, 42-43 [taxpayer remedies statute required each taxpayer to file refund claim and thus barred class action]; Dunn v. Bd. of Prop. Assessment, Appeals & Ruw. (Pa. Commw.Ct. 2005) 877 A.2d 504, 512 [class actions disallowed where the right to seek a tax refund is individual, as refund statute is strictly construed], citing Lilian v. Commonwealth (Pa. 1976) 354 A.2d 250, 253, 467 Pa. 15, 19 [rejecting argument taxpayers with small refund claims will be harmed by lack of class action remedy because stare decisis will protect non-party taxpayers].) IV. McWilliams’ Construction of Section 910 Raises Constitutional Issues That Are Better Avoided Charter cities have legislative authority over “municipal affairs” that trumps inconsistent state statutes. Article XI, § 5 of the state Constitution gives charter cities autonomy in “municipalaffairs,” and provides thatcity charters “with respect to municipal affairs shall supersede all laws inconsistent therewith.”(art. XI, § 5.) This Court has held that “levying taxes to support local expenditures qualifies as a ‘municipal affair’ within the meaning of the home rule provision of our Constitution.” (Cal. Fed. Sav. & Loan Ass’n v. City of Los Angeles (1991) 54 Cal. 3d 1, 13 [hereinafter, “Cal-Fed”].) Charter cities derive their powerto tax directly from the California Constitution, not from statutes of the Legislature. (The Pines v. City of Santa Monica (1981) 46 111688.5 29 Cal.3d 656, 660 [“[t]he taxation poweris vital and is granted to charter cities by the Constitution. (Cal. Const., art. XL § 5, subd. (a)).”]; art. XI, § 12.) 2 On the other hand, this Court has also concluded that the filing of claims for money or damages against California governments is an area of statewide concern as to which the Legislature has occupied the field. (Volkswagen Pacific, Inc. v. City of Los Angeles (1972) 7 Cal.3d 48, 62 n.7.) The boundary between the City’s home rule power to tax under Article XI, §§3, 5 and the Legislature’s ability to establish claiming procedures under Article XI, § 12 has not been lined. The cases Appellant cited below address tort and contract claims, not taxes. For example, Eastlick v. City of Los Angeles (1947) 29 Cal.2d 661, 663 — similarly relied upon by this Court in Volkswagen Pacific — involved a pre-1959 suit against the City of Los Angeles by a plaintiff who tripped on the City’s broken sidewalk. Likewise, Taylor v. City of Los Angeles (1960) 180 Cal.App.2d 255, 257 was a wrongful death action involving an allegedly dangerousstreet. The Court can avoid drawing the boundary between these principles © if, as the City maintains, the Legislature intended no preemption of local tax refund claiming ordinances. Where our Constitution permits the 3 Article XI, § 12 added to our Constitution in conjunction with the implementation of the Government Claims Act in 1959 states: “The Legislature may prescribe procedure for presentation, consideration, and enforcement of claims against counties, cities, their officers, agents, or employees.” 47 111688.5 Legislature to displace local legislation of a charter city, it requires it to do so expressly, with implied preemption disfavored: In broad outline, a court asked to resolve a putative conflict between a state statute and a chartercity measureinitially mustsatisfy itself that the case presents an actual conflict between the two.If it does not, a choice between the conclusions “municipal affair” and “statewide concern”is not required. ... And as the summary ofthe cases relied on by the Court of Appeal in this case... illustrates, many opinions purportedly involving competing state and local enactments do not present a genuine conflict. To the extent difficult choices between competing claims of municipal and state governments can be forestalled in this sensitive area of constitutional law, they oughtto be; courts can avoid making such unnecessary choices by carefully insuring that the purported conflict is in fact a genuine one, unresolvable short of choosing between one enactment andthe other. (Cal-Fed, supra, 54 Cal. 3d at 16-17.) Thus, implied preemption of charter city legislation is disfavored, and this Court advises avoiding such a conflict by construction where possible. Because the legislative history of § 905, subd. (a) and § 810’s express limitation on the scope of § 811.8’s definition of “statute” allow an interpretation that avoids a need to determine the scope of the charter City of Long Beach’s home rule power to tax, that interpretation is preferred. 48 111688.5 However, should the Court find the need to reach the issue, the City’s home rule power to tax necessarily includes the power to frame taxing ordinances that meet the demands of due process. As due process demands a remedy for erroneous taxation, the City has the power to provide it, and to state the means by whichresort to that remedy can be had. To rule otherwise is to eviscerate the taxing power our Constitution confers on chartercities like Long Beach. V. Article Xlll, Section 32 Requires Express Legislative Authorization of Tax Refund Procedures Section 32 reflects a broad public policy requiring that actions for tax refunds be expressly authorized by the Legislature: No legal or equitable process shall issue in any proceeding in any court against this State or any officer thereof to prevent or enjoin the collection of any tax. After paymentof a tax claimedto beillegal, an action may be maintained to recoverthe tax paid, with interest, in such manner as may be providedbythe Legislature. (art. XIII, § 32) (emphasis supplied.) This Court has underscored the point by stating unambiguously that Article XIII, § 32 requires express legislative authorization for all tax refund claims, class or otherwise. (Woosley v. State of California (1992) 3 Cal.4th 758, 792 [“article XIII, section 32 of the California Constitution precludes this court from expanding the methods for seeking tax refunds expressly provided by the legislature”] [“silence did not constitute legislative authorization”].) Thus, the requirement of 49 111688.5 express legislative authorization for tax refund claims derives directly and plainly from our Constitution. A. The Second Sentence of Article XIII, Section 32 Applies to Local Governments The second sentence of Article XIU, § 32, unlike the first, is not limited to the State or its taxes, but addresses tax refund procedures generally. In further contrast to the first sentence, the second contains no limitation whatsoever on the types of tax refunds subject to legislative authority. Reflecting a broad policy requiring legislative authority for all tax claims, the second sentence is stated in broad and unqualified terms. Indeed, what reason could there be to find that the State has greater need for stability in its finances than local governments? Is prison financing more fundamental to the peace and welfare of California than the funding of law enforcement to send people to prison? Or than funding of the county jails to which realignment is sending many formerly state prisoners? Is state funding of education by local K-12 schools more fundamental to the common wealth than local funding for those same schools? Thus, the two sentencesof Article XIIJ, § 32, when: Read together ... establish that the sole legal avenue for resolving tax disputes is a postpayment refund action. A taxpayer may not go into court and obtain adjudication of the validity of a tax which is due but not yet paid. (State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638.) 50 111688.5 Appellant’s claim that Article XIII, § 32 applies only to tax refund actions against the State and not to such actions against local governments,fails. It not only overlooks the distinct language of the two sentences of Article XI, § 32, but overlooks the case law that has long recognized the “pay first, litigate later” policy embodied by Article XIII, § 32 applies to local and state taxes alike. (E.g., Flying Dutchman Park, Inc. v. City & County of San Francisco (2001) 93 Cal.App.4th 1129, 1138 [no injunctive or declaratory relief against local parking tax]; Writers Guild ofAmerica, West, Inc. v. City of Los Angeles (2000) 77 Cal.App.4th 475, 481 [no injunctive or declaratory relief against local business tax]; accord Macy’s Dept. Stores, Inc. v. City & County of San Francisco (2006) 143 Cal.App.4th 1444, 1457 fn. 23; Batt v. City & County of San Francisco (2007) 155 Cal.App.4th 65, 72-73 [equitable relief barred re local transient occupancy tax].) Applied to the case at bar, the second sentence of Article XII, § 32 meansthat the relevant legislature — the Long Beach City Council or the City’s people acting via initiative — must expressly authorize the class claim if Appellant is to pursueit. They have not and he therefore cannot In any event, Long Beach has its own “pay first, litigate later” requirement. Long Beach Municipal Code § 3.68.160 allows service suppliers to claim refunds or credits for utility taxes overpaid, paid more than once, or erroneously orillegally collected or received by the City, but only after the City has first been paid (the supplier must refund or credit the claimed amount to the taxpayer before requesting a refund from the City). 51 111688.5 B. Even If Article XIII, Section 32 Does Not Apply, the City’s OrdinancesStill Provide the Rule of Decision Even if this Court were persuaded that the second sentence of Article XIII, § 32 does not apply to local governments, the Court should nevertheless apply the City’s ordinances here. By enacting § 905, subd.(a), the Legislature fulfilled its mandate under Article XIII, § 32 to specify provisions covering tax refunds. Those provisions are either contained elsewhere in state statutes (as discussed in section ILB., supra) or, to the extent they are not, § 905, subd. (a) and § 935, subd.(a) delegate to local government the Legislature’s authority to enact refund procedures where “claims ... for money or damages” are “not governed by any otherstatutes or regulations expressly relating thereto.” (Gov. Code § 935, subd. (a).) Thus, refund procedures enacted by local governments for refundsoflocal taxes are the backstop for due process when,as here, the state Legislature has not provided a remedy pursuantto Article XIII, § 32. As such, local procedures — like the City of Long Beach’s — are procedures authorized by the relevant legislature and providethe rule of decision to be applied in court. That rule, of course, bars class claims. CONCLUSION In 1959, the Law Revision Commission recommended, and the Legislature adopted, § 905, subd. (a) to exclude tax refund claims from the sweep of an ambitious effort to standardize claiming requirements. It did so for reasons of policy reflected in Article XIII, § 32 of our Constitution and in prior law — tax disputes are different from ordinary tort and 52 111688.5 contract claims*4 — as are the consequences of the judicial branch enjoining the political branches from funding essential government services. The 1963 amendment of the Government Claims Act to address Muskopf v. Corning Hosp. Dist.’s repudiation of sovereign immunity was not intended to change these choices, although the speed with which that complex drafting task was undertaken produced language which can easily trap the unwary — such as the Oronoz panel. As demonstrated above, the legislative intent to preservelocal legislative power to establish reasonable procedures to govern tax refund claims is clear. A contrary reading of § 905, subd. (a) would run afoul of our Constitution and create a legal vacuum the Legislature never intended. Thus, Long Beach plainly had the power to adopt the ordinances in issue here and its construction of those ordinances to bar McWilliams’ putative class claim is reasonable and persuasive. Accordingly, the City respectfully asserts this Court ought to affirm the trial court’s grant of demurrer, reaffirming the rule reflected in Batt and correcting the error reflected in Oronoz. DATED: September 10, 2012 ROBERT E. SHANNON J. CHARLES PARKIN MONTE H. MACHIT LONG BEACH CITY ATTORNEY'S OFFICE 333 West Ocean Blvd., 11Floor Long Beach, CA 90802-4664 (562) 570-2200; (562) 436-1579 (fax) 24 See 2 Cal. Law Revision Com. Rep. (1959), at p. A-17, attached as an Appendixto this Brief. 53 111688.5 111688.5 MICHAEL G. COLANTUONO SANDRA J. LEVIN TIANA J. MURILLO COLANTUONO & LEVIN, PC Ha 9ul) Tiana J. Murillo 300 S. Grand Ave., Suite 2700 Los Angeles, CA 90071-3137 (213) 542-5700 (213) 542-5710 (fax) ATTORNEYS FOR DEFENDANT/ RESPONDENT 54 CERTIFICATION OF COMPLIANCE WITH CAL. R. CT. 8.204(c)(1) Pursuant to California Rules of Court, Rule 8.204(c)(1), the foregoing OpeningBrief on the Merits by Defendant / Respondentthe City of Long Beach contains 12,975 words (including footnotes, but excludingthe tables, “Issues Presented for Review”section and this Certificate) and is within the 14,000 word limit set by Rule 8.204, subd.(c)(1), California Rules of Court. In preparing this certificate, I relied on the word count generated by Wordversion 14, included in Microsoft Office Professional Plus 2010. Executed on September 10, 2012, at Los Angeles, California. COLANTUONO& LEVIN, PC TIANA J. MURILLO finn oyMul Tiana J. Murillo 55 111688.5 APPENDIX 56 111688.5 STATE OF CALIFORNIA CALIFORNIA LAW REVISION COMMISSION _ RECOMMENDATION AND STUDY relating to _ The Presentation of Claims Against Public Entities January 1959 LETTER OF TRANSMITTA L To His EXcELLENcY EpMuNnpD G. Brown Governor of California and to the Membersof the Legislature The California Law Revision Commission was authorized by Resolu- tion Chapter 35 of the Statutes of 1956 to make a study of the various provisions of law relating to the presentation of claims against public bodies and public employees to determine whether they should be made uniform and otherwise revised. The Commission herewith submits its recommendation relating to this subject and the study prepared by its research consultant, Professor Arvo Van Alstyne of the School of Law, University of California at Los Angeles. Tuomas BE. Sranton, Jr., Chairman Joun D. Bassaar, Vice Chairman James A. Coney, Member of the Senate Cuark L, Brapuey, Member of the Assembly Roy A. GUsTAFsON Best W. Levit CHaries H. MartHews Stanrorp C. SHaw SamurL D. THURMAN Rate N, Kixes, Legislative Counsel, ex officio Joun R. McDonovas, JR. Executive Secretary January 1959 A-l PageRECOMMENDATION OF THE CALIFORNIA LAW REVISION COMMISSION_-_-_------------------ A-7 A STUDY RELATING TO THE PRESENTATION OF CLAIMS AGAINST PUBLIC ENTITIES____------------ A-17 INTRODUCTION _______-._.------------------------------- A-17 Lean anp Historical BacKGROUND_---------------------- A-18 Survey or Cuaims PRovisions___--------~----------+----- A-21 Coverage of Existing Claims Provisions__—~—_------------ A-21 - Provisions Relating to Claims Against. the State__-----~- A-22 Provisions Relating to Claims Against Counties_--_---—- A-23 Provisions Relatingto Claims Against Cities ___.---_--- A-24 Provisions Relating to Claims Against Districts_.__~--~- A-29 Cities Not Subject to Claims Statutes_______----------- A-33 Districts Not Subject to Claims Statutes____--_--~----- A-34 Summary of Coverage of Existing Claims Provisions___. A-40 Comparison of Key Provisions___------~---------------- A-42 Types of Claims Subject to Presentation Requirements__ A-42 Time Limits for Filing Claims_-_-_-~------------------ A-46 Preliminary Considerations __-_-------~------~------ AAG Claims Against the State_____-_------------~------- A-49 Claims Against Counties____----------------~------ A-50 Claims Against Cities and Districts ----------------- A-50 Summary of Filing Times____---------------------- A-51 Special Types of Time Requirements__----------~--- A-56 Special Exceptions to Time Requirements__-—~----~-- A-57 Person to Whom Claim Is To Be Presented_-_--~------ A-57 Contents of Claims_.._.-_--------------- n A-62 Statutory Requirements ---- - __ A-62 Amendment of Defective Claims.___-~-------------- A-65 Formal Requisites -_- ---- -e----- __ A-66 Time for Consideration of Claims__——------------~------ A-68 Time for Commencing Action on Claim_--~--~~~------- ‘A-70 Juprcra, INTERPRETATIONS —-~~-—--~---------------------- A-73 General Principles __---------------------------------- A-73 Objectives of Claims Presentation Requirements____~--- A-73 Consequences of Failure to Comply with Claims Procedure A-75 Excuse, Waiver and Estoppel wana _. A-78 TABLE OF CONTENTS A-3 La g ee ee be ng ee pr ea I A ta nt lh BS Pe et T e H a m s t a RECOMMENDATION OF THE CALIFORNIA LAW REVISION COMMISSION Relating to Presentation of Claims Against Public Entities The law of this State contains many. statutes and county and eity charters and ordinances which bar suit against a governme ntal entity for money or damages unless a written statement or ‘‘elaim ’’ setting forth the nature of the right asserted against the entity, the ci rcum- stances giving rise thereto and the amount involved is communic ated to the entity within a relatively short time after the claimant’s cau se of action has accrued. Such provisions are referred to in this Recom menda- tion and Study as ‘‘claims statutes.’ Claims statutes have two principal purposes. First, they giv e the governmental entity an opportunity to settle just claims before s uit is brought. Second, they permitthe entity to make an early inv estigation " of the facts on which a claim is based, thus enabling it to defen d itself against unjust claims and to correct the conditions or practices w hich gave rise to the claim. The principle justifying claims statutes has been extensi vely ac- cepted inCalifornia over a long period of time. Claims statutes a p- peared as early as 1855. Today there are at least 174 sepa rate claims provisions in the law of this State, scattered through statutes, charters, ordinances and regulations. As appears below and more fully in t he research consultant’s report, these provisions differ widely as to many material matters, including claims covered, time for filing, and inform a- tion required to be furnished. It has become increasingly clear in recent years that the impleme n- tation of the claims statute principle in this State by the enactme nt of numerous and conflicting claims provisions has created grave p roblems both for governmental entities and those who have just claims again st them. The Law Revision Commission was, therefore, authorized and directed to study and analyze the various provisions of Jaw relating to the filing of claims against public bodies and public employe es to determine whether.they should be made uniform and otherwise revised. The Commission has made an exhaustive study of existing claims statutes and the judicial decisions interpreting and applying the m. On the basis of this study the Commission has concluded that t he law of this State governing the presentation of claims against gover n- mental entities is unduly complex, inconsistent, ambiguous and aif fi- eult to find, that it is productive of much litigation and that it oft en results in the barring of just claims. This conclusion is supp orted by the following facts among others disclosed by the Commission’s study : # 1. There are at least 174 separate claims provisions in California. Yet a large numberof cities, districts and other local entities are not protected by any claims statute. 1 Cal. Stat. 1966, rea. c, 35, p. 256 2For a more complete statement of the defects in exis ting claims statutes see research consultant's study, infra at A-17. A-T A STUDY RELATING TO THE PRESENTATION O F CLAIMS AGAINST PUBLIC ENTITIES * INTRODUCTION California law contains a large variety of legal provisions found in the codes, general laws, city charters and city ordin ances which require a written claim to be presented before one may s ue & public entity or employee. These provisions are designed to p rotect against unfounded and unnecessary lawsuits. They apply to variou s types of claims and to different types of public entities. Some clai ms against some entities are not subject to a presentation requirement. A ll claims against cer- * tain entities are subject to a presentation requ irement while no claims against some and only specified claims against sti ll other entities are subject thereto. The time limits, formal requisi tes, contents and place to file vary greatly from claim statute to claim s tatute. All of the many diverse provisions, however, share the common general characteristic that compliance with the applicable claim pres entation procedure is a prerequisite to maintenance of a court action to en force the claim. Most of the claims statutes and litigation con cerning them relate to claims for personal injury or property dama ge in tort, for money owing on contract, for breach of contract and f or taking or damaging private property for public use without payment of just compensation (the so-called ‘‘inverse condemnation’’ action). This study relates ex- clusively to legal provisions governing claims i n the foregoing cate- gories. Excluded from the scope of the study, th erefore, are such pro- visions as the following: (1) Provisions governing claims for refund of t axes, assessments, fees, etc. Such provisions are frequently integrat ed with special procedures governing the assessment, levy and col lection of revenue. They are separate and independent from the tort and contract claims provisions and do not create prob lems of the game nature and significance as the claim provisi ons embraced by the report. (2) Provisions governing notices and claims in co nnection with mechanics’ and materialmen’s lien procedures or their statu- tory counterparts applicable to publie constructio n contracts. (3) Provisions governing aid rendered under public assistance pro- grams. (4) Claims of public officers and employees arising u nder the Work- men’s Compensation law. (5) Provisions governing payment of benefits under pension and retirement systems. (6) Provisions for payment of interest and principal on government bonds. * This study was made at the direction of t he Law Revision Commission by Professor Arvo Van Alstyne of the School of Law, University of California at Los Angeles. A-l7 A-18 CALIFORNIA LAW REVISION COMMISSION There seems to be no adequate generic word for referring collectively to statutes, city charters and ordinances. Since claims are governed by legal requirements of all three types, the phrases ‘‘claims statutes’’ and ‘‘claims provisions’’ are used interchangeably herein to refer to all forms of legal claim presentation requirements as a class. For the sake of convenience, the quoted phrases are used only to refer to provi- sions governing presentation of claims against public agencies; the terms ‘‘employee claim statute’’ or ‘‘employee claim provision’’ are utilized to identify generically requirements governing claims which are prerequisite to suit against a public employee. LEGAL AND HISTORICAL BACKGROUND Requirements that certain kinds of claims against public entities be presented in writing to designated officers within a specific time limit as a prerequisite to payment and as a condition precedent to main- taining an action to enforce the claim are purely statutory in nature.* They are found in the law of manystates * and are uniformly held to be valid and constitutional procedural conditions precedent to liability. Claim statutes are not a recent innovation in California law. More than a century ago the County Government Act of 1855 provided that ‘‘no person shall sue a county in any case, or for any demand, unless he or she shall first present his or her claim or demand to the Board of Supervisors for allowance.’’* This provision later provided the basis for Section 40724 of the Political Code adopted in 1872 and is also reflected in the County Government Acts of 1883,5 1891® and 1893.7 It may be regarded as the lineal ancestor of Sections 29700e¢ seq. of our present Government Code which governs presentation of claims against counties. Similarly, the Political Code contained provisions governing claims against the State ;* these, in turn, were based upon earlier claim stat- utes adopted prior to the codes.® The detailed and repetitious claims procedures established for cities of various classes by the Municipal Corporations Act of 1883 !° had their earlier counterparts in claims sections of municipal charters, such as the San Francisco Consolida- tion Act of 1856and the Gilroy Charter of 1870.12 Claims procedures prescribed by ordinances over a half century ago are still in effect, attesting the longevity of such requirements, and city charter claim pro- visions adopted before the turn of the century or soon thereafter have survived unchanged to this day.'* + iyMcQuitum, MUNICIPAL CORPORATIONS § 48.02 (3d ed. 1950). *Cal Stat. 1855, c. 47, § 24, p. 56. «Reenacted in 1907 as Can. Pot. Cope § 4075, Cal Stat. 1907, c. IV, § 4075, p. 379. 5Cal. Stat. 1888, c. 75, § 41, p. 312. 4 “Cal, Stat. 1891, c. 216, § 41, p. 811. : ™Cal. Stat. 1893, c. 234, 41, p. 3638. *CaL. Pot. Cope §§ 660, 663-64 (1872). *Cal. Stat. 1858, c. 267, §§ 8-11, pp. 218-14; Cal. Stat. 1869-70, c, 390, p. 544. wCal Stat. 1883, c 49, §§ 91-97, 266-69, 371, 423, 526, 624, 766, 803, 864, pp. 93 et seq. u Cal. ary HE8S: g125. $ 84, p. 170. See also SackaMENTO Carrer, Cal. Stat. 1861, c, ’ » D. . Cal. Stat. 1869-70, c. 180, § 11, p. 266. 2 Covina ORD. No. 6, adopted Sept. 10, 1901; Esconpmo Orp. No. 16, adopted 1889. 4 Burexa CHartee, Cal. Stat. 1895, c. 5, $§ 168-69, 178, 179, pp. 398-401; San Ber- NARDINO CHARTER, Cal. Stat. 1905, c. , $§ 135, 188, 236-87, pp. 962-63, 977. d i e e e n PRESENTATION OF CLAIMS A-19 Claims presentation procedure has thus been a familiar feature of the California legal scene from the very beginni ng of the State’s his- tory. As early as 1857 the Supreme Court he ld that failure to allege compliance with an applicable claim statu te rendered a complaint wholly insufficient to state a cause of action against a public ageney.!© The claims statutes, however, developed along a d hoc lines with no attempt being made to develop any uniform claim proc edure applicable to all levels of government. As more and more cities adopted free- holder charters claims provisions were often inc orporated in them. Other cities enacted ordinances to regulate claim s procedure. As spe- cial districts increased in number many were er eated by special legis- lation which included claims filing requirements ; other districts were created under general enabling statutes which ma y or may not have provided for filing of claims. The proliferation o f claims statutes was characterized by Jack of any consistent or wides pread agreement on either basic policy or detailed treatment. T he result is extreme non- uniformity multiplied and scattered througho ut many independent statutes, city charters and ordinances. Until relatively recent years the piecemeal esta blishment of diverse and sometimes inconsistent claim requirements ap pears to have caused only occasional difficulties resulting in litigatio n. However, a great upsurge in reported cases relating to claim r equirements began in the late 1920’s and has continued to this day. The re asons for this develop- ment are not difficult to identify. The populatio n boom and its attend- ant problems, the growing complexity of society and the increasingly pervasive role which government began to assum e, particularly at the municipal level, all tended to increase the volume of claims by citizens against governing bodies.'* But even more importa ntly, it was during this period of roughly the past three decades that the law of California experienced an immense expansion of the previ ously narrow limits of governmental liability in tort. No attempt can be made within the scope of th is report to recount in detail the various developments of public liabil ity in tort.17 Some of the principal statutory features should be briefly mentioned, however, in order to better: understand the impact of the ever-enlarging sub- stantive liability of governmental agencies on cl aims procedure. The basic ruleof sovereign immunity from liability fo r torts committed in a ‘‘governmental’’ as distinguished from ‘‘prop rietary”’ capacity '* gave way to its first major statutory modificati on #® when in 1923 the Public Liability Act 2° was adopted. This statute which is today found in the Government Code “2 declared cities, counti es and school districts liable for ‘‘injuries to persons and property res ulting from the danger- 16 McCann v. Sierra County, 1 Cal 121 (1857). 4 See David, Municipal Liability in Tor t in California, 6 So. Ca. L. Rav. 269 (1933). 1 An extremely detailed and careful account covering the period up to 193 83 is found in @ series of articles by Leon David , now Judge of the Superior Court of Los Angeles County. See David, Mun Thability in Tort in Californie. 6 So. Ca L. L. Rev. 269 (1933) and 7 So. CaL Rev. 48, 214, 296, 372 (1 33-34). 18 See Chafor v. Long Beach, 174 Cal. 478, 168 Pac. 670 (1917). ” Only one previous statutory waiver had occurred which covered damages resulting from mob or riot. Cal Stat. 1867-68, c . $44, p. 418, later codified as Cau Po u Copa § 4452 (1944), and today found as CaL. Govr. opm §$ 50140-45. An attempt in 1911 to waive immunity for injuri es resulting from defective public prop erty was held to be unconstitutional for wan t of a sufficient title, Brunson v. Santa Monica, 27 Cal. App. 89, 148 Pac. 950 (1915 ). » Cal Stat. 1923, c. 328, p. 675. s Gat. Govr. Copa § 63651. A-20 CALIFORNIA LAW REVISION COMMISSION ous or defective condition of public streets, highways, buildings, grounds, works and property’’ when specified conditions of notice and negligence existed and authorized them to insure against such lia- bility. Since the statute created liability where none had existed before and also created a large new body of potential claims the Legislature in 1931 saw fit to enact a special claims statute 2? govern- ing only claims arising under the Public Liability Act of 1923. The second major statutory development related to torts involving the operation of motor vehicles. Prior to 1929 municipal liability for motor vehicle accidents depended upon whether the vehicle was en- gaged in a proprietary function or not.?° In that year Section 17144 was added to the Civil Code 24—today, Section 400 of the Vehicle Code—imposing liability upon the State, counties, cities, school dis- tricts and other districts and political subdivisions of the State for the negligence of their officers and employees in the operation of motor vehicles in the course of official duty. As the number of. automobiles and trucks and the corresponding volume of traffic increased this waiver of liability also resulted in an ever larger volume of tort claims against all levels of government. The foregoing statutory developments affecting governmental liabil- _ ity were accompanied by progressive judicial curtailment of the much- criticized immunity doctrine. The availability of the ‘‘inverse con- demnation’’ theory as a technique to circumvent governmental immunity for taking or damaging property was established by several important decisions.25° By liberal interpretation the Public Liability Act has been stretched to cover situations not obviously within its language.?° There is no longer any doubt that the State is liable for negligence in the course of proprietary activities ;?" and prior judicial intimations 28 that a county’s functions are exclusively governmental and hencecan never give rise to tort liability in the absence of statute have been expressly disapproved by the Supreme Court.?* This steady expansion of thescope of governmental liability inevi- tably brought into operation in an increasing number of cases the existing claims statutes. The large volume of reported decisions involv- ing claims procedure in the past 34 years, since adoption of the Public Liability Act of 1923, attests to the practical difficulties which claim- ants increasingly encountered in seeking to follow the appropriate 1 Cal. Stat. 1981, c. 1167, p. 2475, now Cau Govr. Copm §§ 53050-56. %8ee David, Municipal Liability fe Tort in California, 7 So. Cat. lL. Rov. 872, 382-86 1934). % Cal, Stat. 1929, c. 260, p. 565. . % Rose v. State, 19 Cal.2d 718, 128 P.2d 505 (1942), holding Cau. Const. Art. J, § 14 to be a self-enforcing basis for liability for which no immunity exists at any Jevel of government. See also Heimann v. City of Los Angeles, 30 Cal2d 746, 185 P.2d 697 (1947) ; House v. Los Angeles County Flood Control Dist., 25 Cal2d 384, 168 P.2d 950 (1944). : . ™See Petera v. San Francisco, 41 Cal.2d 419, 260 P.2d 55 (1953) (constructive notice of defect is sufficient); Gove v. Lakeshore Homes Ass‘n, 64 Cal. App.2d 155, 128 P.2d 716 (1942) (erosion from discharging sewer outlet held action- able); Bauman v. San Francisco, 42 Cal. App.2d 144, 108 P.2d 989 (1940) (negligent supervision of playground activities treated aa creating a dangerous and defective condition) ; Cressey v. City of Los Angeles, 10 Cal. App.2d 245, 63 P.2d 172 (1985) (imputed notice); Barrett v. City of Sacramento, 128 Cal. App. 708, 18 P.2d 856 (1983) (broken depression in sidewalk three-eighths of an inch deep, held actionable), % Guidi v. State, 41 Cal2d 623, 262 P.2d 3 (1953); People v. Superior Court, 29 CaL2d 754, 178 P.2d 1 (1947). % Dillwood v. Riecks, 42 Cal. App. 602, 184 Pac. 35 (1819). » Guidi v. State, 41 Cal2d 628, 627, 262 P.2d 8, 5 (1953). PRESENTATION OF CLAIMS A-21 procedural route to realization of the newly recognized su bstantive rights. An exhaustive search of the reports covering the seve nty-three years from 1850 to 1923 has disclosed but 38 supr eme court and 11 district court of appeal decisions or a total of 49 cases w hich involve the interpretation, application or effect of a claims provision. Since 1923 on the other hand—a period less than one-half as long—there have been 39 supreme court decisions and 135 decisions of the district courts of appeal (not counting opinions later vacated upon grant of hearing by the supreme court) for a total of 174 cases re lating to claims statutes. This nearly four-fold increase in reported cases over the past three decades suggests that there are serious deficiencies in the p resent claims statutes. Such provisions, being fundamentally pro cedural in nature, should conform to the desiderata of simplicity and eff ectiveness which society has a right to expect of the means by which legally recognized rights are enforceable. Unfortunately, the exist ing pattern of claims provisions fails to meet these standards and in consequence claims procedures have been termed by the Supreme Co urt as ‘‘traps for the unwary’’ *° and by a legal writer on the subject as ‘‘a bramble patch of legislation which, in many cases, completely chokes off . . . substantive rights.’’ * SURVEY OF CLAIMS PROVISIONS Coverageof Existing Claims Provisions Legal requirements governing thefiling of claims are surprisin gly numerous in California. They are to be found in five sources: (1) the California codes, (2) the uncodified general laws of the State, (3) c ity charters, (4) municipal ordinances and (5) rules and regulati ons promulgated by designated governmental agencies pursuant to sta tu- tory authorization. In the pages immediately following the various statutory,*? charter and ordinance claims provisions are listed in terms of the ty pe of governmental agency to which they apply with a brief descript ion of the nature of the claims covered. For convenience in referring to them later in this study, all claims provisions listed are numbered con- secutively. 0 Stewart v. McCollister, 37 Cal.2d 208, 281 P.2d 48 (1951). a Ward, Requirements for Filing Claims Against Gover nmental Units in California, 38 CALIF. L. Rav. 259, 271 (1950). * This report was prepared during the 1957 General S ession of the California Legis- lature. It therefore collates and analyzes the statute law existing prior to changes enacted at that session. The several new enactment s relating to claims do not materially alter either the analysis or the conclus ions reached in the report, although in-a few instances minor details are affec ted. Among the changes adopted in the statutes of 1957 are: (a) Chapter 99, amending Government Code Section 29714 relating to rejection of claims againat counties ; (b) Chapter 252, adding a new Section 12889 to the Pub lic Utilities Code, to provide for filing of claims against municipal utility dis tricts ; (c) Chapter 214, adding a new Section 29700.1 to the Go vernment Code, relating to itemization of certain types of claims against counti es ; (d) Chapter 518, creating the Contra Costa County Wa ter Agency, and incor- porating in Section 20 thereof the county claims procedu re as applicable to all clatms against the agency. CERTIFICATE OF SERVICE I, Kimberly Nielsen, the undersigned, declare: 1. That declarant is and was,at all times herein mentioned, a citizen of the United States and a resident of the County of Los Angeles, over the age of 18 years, and not a party to or interested in the within action; that declarant’s business address is 300 South Grand Avenue, Suite 2700, Los Angeles, California 90071. 2. That on September 10, 2012, declarant served the CITY OF LONG BEACH’S OPENING BRIEF ON THE MERITSvia U.S. Mail in a sealed envelopefully prepaid and addressedtothe parties listed on the attached ServiceList. 3. That there is regular communication between the parties. I declare under penalty of perjury that the foregoing is true and correct. Executed this 10day of September, 2012, at Los Angeles, California. COLANTUONO & LEVIN, PC Lucieduh Kimberly Niqfsey 111688.5 McWilliamsv. City of Long Beach,etal. Case No. 5202037 Service List COUNSEL FOR PLAINTIFFS IN THIS ACTION: Francis M. Gregorek Rachele R. Rickert WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP 750 B Street, Suite 2770 San Diego, CA 92101 (619) 239-4599 (619) 234-4599 (fax) Nicholas E. Chimicles Timothy N. Mathews Benjamin F. Johns CHIMICLES & TIKELLIS LLP One Haverford Centre 361 West Lancaster Avenue Haverford, PA 19041 (610) 641-8500 (610) 649-3633 (fax) timothymathews@chimicles.com Jon A. Tostrud 9254 Thrush Way West Hollywood, CA 90069 (310) 276-9179 111688.5 McWilliams v. City of Long Beach,etal. Case No. $202037 Service List Sandra W. Cuneo CUNEO GILBERT & LADUCA 330 South Barrington Ave., #109 Los Angeles, CA 90049 (424) 832-3450 (424) 832-3452 (fax) COURTESY COPIES TO: 111688.5 Honorable Anthony J. Mohr Superior Court of California County of Los Angeles 600 S. Commonwealth Ave. Los Angeles, CA 90005 Clerk of the Court California Court of Appeal second Appellate Division 300 S. Spring Street, 2nd Floor Los Angeles, CA 90013