A San Diego Supreme Court judge recently overruled a challenge by the city of Chula Vista to dismiss a class-action lawsuit against it regarding alleged illegal cell phone taxes.
Judge Richard E.L. Strauss ruled in favor of plaintiffs Carla Villa and Vanessa Garza, saying that state law which allows class-action lawsuits for tax refunds trumps local statute.
“One appellate district in California says yes and one says no, so there’s kind of a conflict of law,” Chula Vista Deputy City Attorney Bart Miesfeld said. “We’re considering attempting to appeal the trial court’s ruling in the near future.”
The lawsuit was filed against the city last year by law firms Casey Gerry and Capretz & Associates and stems from a five percent fee collected by the city for anyone using intrastate telephone communication services under the city’s 1970 utility users tax.
A trial date is set for Jan. 18, 2013.
Plaintiffs are suing for declaratory, injunctive, monetary and other relief, seeking millions in compensation from the city for resident cell phone users for services rendered by local utility companies.
Plaintiff’s attorney Thomas Penfield says the tax is a blatant violation of the city’s municipal code, which clearly prohibits taxes on mobile phones.
“Through this class action, we seek a refund for back taxes unlawfully collected over the years,” he said.
An attempt by the city to update the UUT language through Prop. H, which also would have extended the tax for newer forms of communication, failed in the November 2010 election when the public voted it down by more than 14 percent.
“In the face of rejection by the voters, they are still collecting the tax out of the local economy,” Penfield said.
