Opinion ID: 1155601
Heading Depth: 1
Heading Rank: 10

Heading: Validity of the Class Claim

Text: The state contends this suit improperly was certified as a class action. As explained below, we do not reach this issue because we conclude that the class claim filed by Woosley was not authorized by statute. This court has held that a class action may be employed to seek refunds of sales and use taxes ( Javor v. State Board of Equalization (1974) 12 Cal.3d 790, 797 [117 Cal. Rptr. 305, 527 P.2d 1153]), and has approved the use of class claims seeking damages from governmental entities for injuries caused by an act or omission of a public entity or its employee ( City of San Jose v. Superior Court (1974) 12 Cal.3d 447 [115 Cal. Rptr. 797, 525 P.2d 701, 76 A.L.R.3d 1223]). Several decisions of the Court of Appeal have extended the holding in City of San Jose to permit the filing of class claims seeking tax refunds, reasoning by analogy to the claims statute construed in City of San Jose that the existing tax-refund statutes could and should be interpreted to authorize the filing of class claims. ( Schoderbek v. Carlson (1980) 113 Cal. App.3d 1029, 1033 [170 Cal. Rptr. 400]; Lattin v. Franchise Tax Board (1977) 75 Cal. App.3d 377, 381 [142 Cal. Rptr. 130]; Santa Barbara Optical Co. v. State Bd. of Equalization (1975) 47 Cal. App.3d 244, 249 [120 Cal. Rptr. 609]; see also Javor v. State Bd. of Equalization (1977) 73 Cal. App.3d 939, 948 [141 Cal. Rptr. 226].) Apparently considering the question to be settled, the state has not raised the issue whether a class claim may be filed seeking refunds of vehicle license fees and use taxes. This court, however, never has considered that issue. Because of the general public importance of the issue, and because we had serious questions concerning the resolution of the matter, we requested supplemental briefing on this issue following oral argument. (12a, 13a) For the reasons that follow, we hold that the class claim filed in the present case was not authorized by the statutes governing claims for refunds of vehicle license fees and use taxes. Accordingly, that claim is valid only as to Woosley in his individual capacity, and the class in the present class action properly may include only persons who timely filed valid claims for refunds. Plaintiff contends that this court's decision in City of San Jose v. Superior Court, supra, 12 Cal.3d 447 compels the conclusion that class claims may be employed to seek tax refunds. We disagree. City of San Jose held that a class claim could be filed pursuant to Government Code section 910, which governs claims seeking damages from governmental entities for injuries caused by an act or omission of the public entity or its employee. Government Code section 910 provides in part: A claim shall be presented by the claimant or by a person acting on his or her behalf and shall show all of the following: [¶] (a) The name and post office address of the claimant.... (Italics added.) In City of San Jose this court stated: We conclude `claimant,' as used in [Government Code] section 910, must be equated with the class itself and therefore reject the suggested necessity for filing an individual claim for each member of the purported class. To require such detailed information in advance of the complaint would severely restrict the maintenance of appropriate class actions  contrary to recognized policy favoring them. [Citations.] We do not believe the claims statutes were intended to thwart class relief. [Fn.] ( City of San Jose v. Superior Court, supra, 12 Cal.3d 447, 457.) Contrary to the line of Court of Appeal decisions cited above, we conclude, for the reasons that follow, that the holding in City of San Jose v. Superior Court, supra, 12 Cal.3d 447, should not be extended to include claims for tax refunds. (14) The California Constitution expressly provides that actions for tax refunds must be brought in the manner prescribed by the Legislature. Article XIII, section 32, of the California Constitution provides in this regard: After payment of a tax claimed to be illegal, an action may be maintained to recover the tax paid, with interest, in such manner as may be provided by the Legislature.  (Italics added.) This constitutional limitation rests on the premise that strict legislative control over the manner in which tax refunds may be sought is necessary so that governmental entities may engage in fiscal planning based on expected tax revenues. (See State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638 [217 Cal. Rptr. 238, 703 P.2d 1131].) Vehicle license fees and use taxes are excise taxes ( Piazza Properties, Ltd. v. Department of Motor Vehicles (1977) 71 Cal. App.3d 622, 628 [138 Cal. Rptr. 357]), refunds of which fall within the ambit of article XIII, section 32 of the state Constitution. The Legislature has provided different methods for seeking refunds of vehicle license fees and use taxes. (12b) We turn first to the procedure which the Legislature has provided for seeking a refund of vehicle license fees. Section 10901 states: Whenever the department [of motor vehicles] erroneously collects any license fee not required to be paid under this part, the amount shall be refunded to the person paying it upon application therefor made within three years after the date of the payment. (See also Veh. Code, § 42232.) Vehicle Code section 42231 provides:  [T]he person who has paid the erroneous or excessive fee or penalty, or his agent on his behalf, may apply for and receive a refund of the amount thereof as provided in this article.... (Italics added.) The legislative plan requires the filing of an application for refund as a condition precedent to the existence of liability upon which, after administrative remedies are exhausted, an action may be brought. ( Piazza Properties, Ltd. v. Department of Motor Vehicles, supra, 71 Cal. App.3d 622, 628, State Bd. of Equalization v. Superior Court, supra, 39 Cal.3d 633, 638.) The Legislature, therefore, has required that a claim for a refund of vehicle license fees must be filed by  the person who has paid the erroneous or excessive fee or penalty, or his agent on his behalf.  (Veh. Code § 42231, italics added.) Within the context of this statute, the term person does not include a class, and a class representative who files a claim on behalf of all others similarly situated, without the knowledge or consent of such other persons, is not the agent of the members of the class. (Civ. Code, §§ 2299, 2300; 2 Witkin, Summary of Cal. Law (9th ed. 1987) Agency & Employment, §§ 36-40, pp. 49-52.) Accordingly, a class claim for refunds of vehicle license fees, such as the one here at issue, is not authorized by statute. [24] (13b) We now examine the method which the Legislature has provided for seeking a refund of use taxes. Section 6901 et seq. governs claims for refunds of sales and use taxes. Sections 6902, subdivision (a), 6905, and 6932 provide that unless a claim for refund is filed within three years of the overpayment, no suit may be brought. ( Philips & Ober Electric Co. v. State Bd. of Equalization (1991) 231 Cal. App.3d 723, 728 [282 Cal. Rptr. 338].) These statutes do not, however, address who may file such a claim or whether a class claim may be filed. An examination of the entire statutory scheme that governed requests for refunds of sales and use taxes when Woosley's claim was filed in 1977 reveals, however, that class claims were not contemplated. If the SBE denied a claim, that entity was required, within 30 days, to serve notice of its action on the claimant in the manner prescribed for service of notice of a deficiency determination. (§ 6906.) Section 6486, in turn, provided in 1977 that the SBE shall give written notice of a deficiency determination to the retailer or person storing, using, or consuming tangible personal property, either by mail or by delivering it to the person to be served. The language of section 6486 suggests that notice must be given to each individual taxpayer. No mention is made of notice to a class representative. The requirement that notice of the denial of a claim must be given to each individual taxpayer thus is inconsistent with the use of a class claim. When Woosley filed his claim in 1977, section 6904 read: Every claim shall be in writing and shall state the specific grounds upon which the claim is founded. In 1987, approximately 10 years after Woosley filed his claim, the Legislature amended section 6904 to add the following language as subdivision (b): A claim filed for or on behalf of a class of taxpayers shall do all of the following: [¶] (1) Be accompanied by written authorization from each taxpayer sought to be included in the class. [¶] (2) Be signed by each taxpayer or taxpayer's authorized representative. [¶] (3) State the specific grounds on which the claim is founded. (Stats. 1987, ch. 38, § 5, p. 101.) The statute as amended in 1987 expressly permits, for the first time, the filing of a class claim, but requires that each member of the class authorize his or her inclusion in the class and that each member of the class, or the class member's authorized representative, sign the claim. A class claim for refund of sales and use taxes may not be submitted, as it was in the present case, without the knowledge and express consent of each member of the class. (15) The purpose of this amendment to section 6904, governing claims for refunds of sales and use taxes, was to extend to class claims against the SBE the written authorization requirements imposed the year before on class claims for refunds filed with the Franchise Tax Board. (Sen. Com. on Rev. and Tax., Analyses of Measures Heard (1987-1988 Sess.) p. 417.) In 1986, the Legislature had amended section 19055, governing claims for refunds of personal income taxes, and section 26074, governing claims for refunds of bank and corporate taxes, to add language nearly identical to that later added to section 6904. Both the 1987 amendment to section 6904 and the 1986 amendments to sections 19055 and 26074 were intended to spare the state the substantial administrative costs associated with identifying and notifying class members once a case had been certified as a class action. (Sen. Com. on Rev. and Tax., Analyses of Measures Heard, supra, p. 417.) (13c) Counsel for the class asserts in its brief that the amendments to sections 6904, 19055, and 26074 demonstrate that class claims ... were proper prior to the enactment of the amendments. (Italics in original.) We disagree. The circumstance that, in amending sections 6904, 19055, and 26074, the Legislature chose to allow a narrowly circumscribed form of class claims, does not demonstrate that it previously had authorized a more expansive type of class claim. As explained above, we conclude that prior to the 1986 and 1987 amendments, class claims seeking tax refunds were not statutorily authorized. The Court of Appeal, however, had upheld the filing of such class claims. ( Schoderbek v. Carlson, supra, 113 Cal. App.3d 1029, 1033; Lattin v. Franchise Tax Board, supra, 75 Cal. App.3d 377, 381; Santa Barbara Optical Co. v. State Bd. of Equalization, supra, 47 Cal. App.3d 244, 249; see also Javor v. State Bd. of Equalization, supra, 73 Cal. App.3d 939, 948.) The Legislature's response to these judicial decisions reveals no more than a desire to avoid the adverse consequences of the filing of class claims for tax refunds, and does not demonstrate that the Legislature previously had intended to authorize the filing of such class claims. Nothing in the 1987 amendment to section 6904 indicates an intent to permit the filing of a class claim of the type here at issue, nor an acknowledgement by the Legislature that such claims previously had been permitted. Had the Legislature amended section 6904 by explicitly prohibiting the filing of all class claims, we would not infer that the Legislature intended to suggest that previously such claims had been permitted. Here, the Legislature prohibited the type of class claim filed by Woosley. The Legislature permitted only those class claims where each member of the class expressly authorizes and signs the claim. Prior to the 1986 and 1987 amendments, the Legislature had been silent on the subject of class claims seeking refunds of use taxes. This silence did not constitute legislative authorization of such class claims. In sum, article XIII, section 32, of the California Constitution precludes this court from expanding the methods for seeking tax refunds expressly provided by the Legislature. Prior to the 1987 amendment to section 6904, the Legislature had not authorized class claims for refunds of use (and sales) taxes. Accordingly, class claims seeking such refunds were not permitted prior to the effective date of the 1987 amendment. We disapprove the decisions in Schoderbek v. Carlson, supra, 113 Cal. App.3d 1029; Lattin v. Franchise Tax Board, supra, 75 Cal. App.3d 377; Javor v. State Bd. of Equalization, supra, 73 Cal. App.3d 939, and Santa Barbara Optical Co. v. State Bd. of Equalization, supra, 47 Cal. App.3d 244, to the extent they express views to the contrary. Citing the decision in American Pipe & Construction Co. v. Utah (1974) 414 U.S. 538 [38 L.Ed.2d 713, 94 S.Ct. 756] (hereafter, American Pipe ), plaintiff contends that the claims of all of the class members have been tolled during the pendency of the instant action, and that if we disallow Woosley's class claim, notice would have to be given to each putative class member that (1) they were entitled to a refund of use taxes and license fees, and (2) the time to file a claim for refund was running from the date of notice. We need not, and do not, decide plaintiff's first contention that the claims of all of the class members have been tolled during the pendency of the instant action because that issue affects only those persons who did not file valid claims and who, therefore, are not included in the present class. The well-established rule is that we should avoid advisory opinions. [Citation.] ( Neary v. Regents of University of California (1992) 3 Cal.4th 273, 284 [10 Cal. Rptr.2d 859, 834 P.2d 119]; State v. State Tax Com'n of Missouri (Mo. 1983) 651 S.W.2d 130, 133.) (16) We do reach plaintiff's second contention, that if we disallow Woosley's class claim, notice would have to be given to each putative class member that (1) they were entitled to a refund of use taxes and license fees, and (2) the time to file a claim for refund was running from the date of notice, because this issue affects the parties before the court in that the burden of providing notice would be borne by the parties. We disagree, however, with plaintiff's contention that such notice is required. Whatever merit there may be in plaintiff's argument that the time for putative class members to file claims has been tolled, we are unaware of any requirement that notice be given to persons affected by such tolling of the period in which to file a claim. The decision in American Pipe required only that persons who will be included in the class be notified so that they have an opportunity to opt out of the class and thus not be bound by the resulting judgment. Neither the decision in American Pipe, supra, 414 U.S. 538, nor any other authority of which we are aware, requires that persons who are outside the class be notified of that fact. (17) Plaintiff further contends that any decision holding that class claims seeking tax refunds may not be filed, should be applied prospectively only, because potential claimants reasonably relied upon decisions of the Courts of Appeal which reached a contrary conclusion. The general rule that judicial decisions are given retroactive effect is basic in our legal tradition. ( Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978 [258 Cal. Rptr. 592, 772 P.2d 1059].) We have stressed that although this rule of retroactivity has not been an absolute one ( id. at p. 979), exceptions are limited. The circumstance that our decision overrules prior decisions of the Courts of Appeal does not in itself justify prospective application. ( Id. at p. 986.) To determine whether a decision should be given retroactive effect, the California courts first undertake a threshold inquiry: does the decision establish a new rule of law? If it does, the new rule may or may not be retroactive ...; but if it does not, `no question of retroactivity arises,' because there is no material change in the law. [Citations.] ( People v. Guerra (1984) 37 Cal.3d 385, 399 [208 Cal. Rptr. 162, 690 P.2d 635].) An example of a decision which does not establish a new rule of law is one in which we give effect to a statutory rule that the courts had theretofore misconstrued ( People v. Mutch (1971) 4 Cal.3d 389, 394).... ( Id. at p. 399, fn. 13; McManigal v. City of Seal Beach (1985) 166 Cal. App.3d 975, 981-982 [212 Cal. Rptr. 733].) Whenever a decision undertakes to vindicate the original meaning of an enactment, putting into effect the policy intended from its inception, retroactive application is essential to accomplish that aim. [Citation.] ( People v. Garcia (1984) 36 Cal.3d 539, 549 [205 Cal. Rptr. 265, 684 P.2d 826].) Accordingly, we conclude that our holding that the Legislature had not authorized, at the time here in question, the filing of class claims seeking refunds of vehicle-license fees and use taxes, should be applied retroactively. (18) Plaintiff and amicus curiae, Association of California Car Clubs, point out that the parties stipulated in the trial court that the Court's determination on liability shall bind defendants as to all prospective class members that may be defined by order of Court entered subsequent to the determination of liability, and argue that this stipulation binds the state to provide relief to all members of the class as defined in Woosley's class claim. We do not read this stipulation so broadly. The apparent purpose of the stipulation was to allow the court to determine the liability issues before deciding whether to certify the case as a class action. The parties stipulated that the determination of liability issues would bind all members of the class as may be defined by order of Court. This agreement is not inconsistent with a subsequent ruling that the class includes only those persons who have timely filed valid claims. In the event the class as defined is not numerous enough to justify a class action, the stipulation does not mandate that a class be certified.