Justia Class Action Opinion Summaries

Adam Steele and Krystal Comer, tax return preparers, challenged the IRS's requirement to obtain or renew a Preparer Tax Identification Number (PTIN) by completing Form W-12, which involves paying a fee and disclosing personal information. They initially joined a class action in 2014 contesting the IRS's authority to impose these fees and the amount of information required by Form W-12. However, class counsel later withdrew these claims. Steele and Comer then attempted to revive these claims in a separate lawsuit.The United States District Court for the District of Columbia dismissed their complaint, citing the rule against claim-splitting, which prevents duplicative litigation between the same parties asserting the same claims, even without a final judgment in the first case. The district court found that Steele and Comer had already raised and then withdrawn these claims in the ongoing class action and were denied leave to amend the complaint to reassert them.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court's dismissal. The appellate court held that the Paperwork Reduction Act (PRA) does not bar judicial review of the IRS's authority to demand information through Form W-12, but the rule against claim-splitting still precludes the plaintiffs' suit. The court emphasized that claim-splitting bars duplicative litigation filed before final judgment and that Steele and Comer had a fair opportunity to litigate their claims in the earlier class action. The court concluded that the district court's dismissal was proper to prevent strategic end runs around procedural rulings and to preserve the integrity of the adjudicative process. View "Steele v. United States" on Justia Law

Plaintiffs, who owned real property in Southfield, Michigan, became delinquent on their property taxes between 2012 and 2014. Oakland County foreclosed on their properties under the General Property Tax Act (GPTA). The plaintiffs had the opportunity to redeem their properties by paying the delinquent taxes, but they failed to do so. Consequently, the properties were foreclosed, and the city of Southfield exercised its right of first refusal to purchase the properties for the minimum bid, which included the unpaid taxes and associated fees. The properties were then conveyed to the Southfield Neighborhood Revitalization Initiative (SNRI).The plaintiffs filed a class action lawsuit in the Oakland Circuit Court, alleging violations of their constitutional rights, including the Takings Clauses of the Michigan and United States Constitutions. The trial court granted summary disposition in favor of the defendants, citing lack of jurisdiction, lack of standing, and res judicata. The Michigan Court of Appeals affirmed the trial court's decision. However, the Michigan Supreme Court vacated the Court of Appeals' decision and remanded the case for reconsideration in light of its decision in Rafaeli, LLC v Oakland Co, which held that retaining surplus proceeds from tax-foreclosure sales violated the Takings Clause of the Michigan Constitution.On remand, the trial court again granted summary disposition to the defendants, but the Court of Appeals reversed in part, holding that Rafaeli applied retroactively and that the plaintiffs had valid takings claims. The Michigan Supreme Court reviewed the case and held that a taking occurs when a governmental unit retains property without offering it for public sale and the value of the property exceeds the amount owed in taxes and fees. The Court also held that MCL 211.78m, as amended, applies prospectively, while MCL 211.78t applies retroactively but does not govern this case. The case was remanded to the trial court for further proceedings. View "Jackson v. Southfield Neighborhood Revitalization Initiative" on Justia Law

The City of East Lansing entered into an agreement with the Lansing Board of Water and Light (LBWL) in 2016, which included a franchise fee to be charged to LBWL consumers residing within the City. The fee was collected by LBWL and remitted to the City. Plaintiff James Heos, representing a class of LBWL consumers, filed a complaint against the City, alleging that the franchise fee was an illegal tax under the Michigan Constitution's Headlee Amendment and other state laws.The trial court granted summary disposition in favor of the plaintiff on most counts, ruling that the franchise fee was an illegal tax. The Michigan Court of Appeals reversed this decision, directing the trial court to grant summary disposition in favor of the City, concluding that the plaintiff was not a taxpayer and thus his claim was time-barred.The Michigan Supreme Court reviewed the case and held that the franchise fee was indeed a tax because it was used for general revenue-raising purposes, was not proportionate to any costs incurred by the City, and was not voluntary. The Court further held that the plaintiff was a taxpayer because the legal incidence of the fee fell on the LBWL consumers, not LBWL itself. The Court reversed the Court of Appeals' decision and remanded the case to the trial court for further proceedings, allowing the plaintiff to pursue his Headlee Amendment claim. View "Heos v. City Of East Lansing" on Justia Law

The City of Rittman filed an original action in prohibition against Judge Corey E. Spitler of the Wayne County Common Pleas Court. Rittman sought to prevent Judge Spitler from exercising jurisdiction over a class-action lawsuit in which Rittman was named as a defendant. The lawsuit, filed by Tara Boler and Trista Bise, alleged that Rittman had illegally collected a 0.5 percent income tax increase beyond its authorized period and sought refunds for the overcharged taxes from 2008 to 2022.In the Wayne County Common Pleas Court, Judge Spitler denied Rittman’s motion to dismiss and motion to stay discovery, and he established a case-management schedule. Rittman then sought a writ of prohibition from the Supreme Court of Ohio to stop Judge Spitler from proceeding with the case, arguing that the lawsuit was an impermissible attempt to bypass the statutory process for obtaining tax refunds.The Supreme Court of Ohio reviewed the case and determined that Judge Spitler had jurisdiction and statutory authority under R.C. 2723.01 to hear the case. The court found that the plaintiffs' claims were substantively governed by R.C. 2723.01, which allows common pleas courts to enjoin the illegal levy or collection of taxes and entertain actions to recover them when collected. The court concluded that although the plaintiffs did not explicitly invoke R.C. 2723, their claims fit within its scope. Therefore, the Supreme Court of Ohio denied the writ of prohibition, allowing Judge Spitler to continue exercising jurisdiction over the underlying case. View "State ex rel. Rittman v. Spitler" on Justia Law

In 2018, Anaheim voters approved a Living Wage Ordinance (LWO). The LWO applied to hospitality employers in the Anaheim or Disneyland Resort areas that benefited from a “City Subsidy.” In 2019, Kathleen Grace and other plaintiffs (“Employees”) filed a class action complaint against the Walt Disney Company, Walt Disney Parks and Resorts, U.S., Inc. (“Disney”) and Sodexo, Inc., and Sodexomagic, LLC (“Sodexo”) alleging a violation of the LWO (Sodexo operated restaurants in Disney’s theme parks). Disney moved for summary judgment and Sodexo joined. It was undisputed the Employees were not being paid the required minimum hourly wage under the LWO. However, Disney argued it was not covered under the LWO as a matter of law because it was not benefitting from a “City Subsidy.” The trial court granted the motion for summary judgment. The Court of Appeal disagreed: “A ‘City Subsidy’ is any agreement with the city pursuant to which a person other than the city has a right to receive a rebate of transient occupancy tax, sales tax, entertainment tax, property tax or other taxes, presently or in the future, matured or unmatured.” The Court determined that through a "reimbursement agreement," Disney had the right to a rebate on transient occupancy taxes (paid by hotel guests), sales taxes (paid by consumers), and property taxes (paid by Disney), in any years when the City’s tax revenues were sufficient to meet certain bond obligations. Consequently, the Court found Disney received a “City Subsidy” within the meaning of the LWO and was therefore obligated to pay its employees the designated minimum wages. View "Grace v. The Walt Disney Company" on Justia Law

Defendant LuLaRoe, a multilevel-marketing company that sells clothing to purchasers across the United States through “fashion retailers” located in all fifty states, allegedly charged sales tax to these purchasers based on the location of the retailer rather than the location of the purchaser. LuLaRoe eventually refunded all the improper sales tax it collected, but it did not pay interest on the refunded amounts. Plaintiff, an Alaska resident who paid the improperly charged sales tax to LuLaRoe, brought this class action under Alaska law on behalf of herself and other Alaskans who were improperly charged, for recovery of the interest on the now-refunded amounts collected and for recovery of statutory damages. The district court certified the class under Rule 23(b)(3) and LuLaRoe appealed under Rule 23(f).   The Ninth Circuit vacated the district court’s order certifying the class of Alaska purchasers and remanded for further proceedings. The panel first rejected LuLaRoe’s argument that class certification was improper because the small amount of money currently owed to some class members was insufficient to support standing and the presence of these class members in the class made individualized issues predominant over class issues. The panel next rejected LuLaRoe’s assertion that some purchasers knew that the sales tax charge was improper but nevertheless voluntarily paid the invoice which contained the improperly assessed sales tax amount, and thus, under applicable Alaska law, no deceptive practice caused any injury for these purchasers. Finally, the panel held that LuLaRoe’s third argument, that class certification should be reversed because some fashion retailers offset the improper sales tax through individual discounts, had merit. View "KATIE VAN V. LLR, INC., ET AL" on Justia Law

DirecTV and Dish Network (“Defendants”) provide video services in part through the Internet. The City of Creve Coeur filed this class action in Missouri state court on behalf of local government authorities, seeking a declaratory judgment that Defendants are liable under the Video Services Providers Act (“VSPA”) and implementing local ordinances, plus injunctive relief, an accounting of unpaid fees, and damages. Defendants removed the action based on diversity jurisdiction and the Class Action Fairness Act (CAFA). After the state court entered an interlocutory order declaring that VSPA payments are fees, rather than taxes, DirecTV filed a second notice of removal, arguing this order established the required federal jurisdiction. The district court granted Creve Coeur’s motion to remand.   The Eleventh Circuit affirmed on different grounds. The court explained that the district court’s remand order plainly stated that the remand was based on comity principles as articulated in Levin, not on “state-tax based comity concerns.” Comity as a basis to remand was raised and fully argued in the first remand proceeding. Federal courts have long precluded two bites at this apple. Second, the Supreme Court in Levin emphatically stated that the century-old comity doctrine is not limited to the state-tax-interference concerns that later led Congress to enact the TIA. Third, the state court’s December 2020 Order addressed, preliminarily, only the VSPA fee-or-tax issue under state law. It did not address the broader considerations comity addresses. The state court order in no way overruled or undermined the basis for the district court’s first remand order. Therefore, DirecTV failed to establish the essential basis for a second removal. View "City of Creve Coeur v. DirecTV LLC" on Justia Law

The Fox and Puchlak filed purported class actions, alleging that Michigan counties seized property to satisfy property-tax delinquencies, sold the properties, and kept the difference between the sales proceeds and the tax debts.. The suits assert that the counties committed takings without just compensation or imposed excessive fines in violation of the Michigan and federal constitutions. Genesee County’s insurance, through Safety, precludes coverage for claims “[a]rising out of . . . [t]ax collection, or the improper administration of taxes or loss that reflects any tax obligation” and claims “[a]rising out of eminent domain, condemnation, inverse condemnation, temporary or permanent taking, adverse possession, or dedication by adverse use.”Safety sought a ruling that it owed no duty to defend or to indemnify. The district court entered summary judgment, finding no Article III case or controversy between Safety and Fox and Puchlak. The court also held that Safety owes Genesee County no duty to defend. The Sixth Circuit affirmed. Safety lacks standing to sue Fox and Puchlak over its duty to defend and its claim for the duty to indemnify lacks ripeness. Safety owes no duty to defend; the alleged tax-collection process directly caused the injuries underlying each of Fox’s and Puchlak’s claims. View "Safety Specialty Insurance Co. v. Genesee County Board of Commissioners" on Justia Law

In 2015, the Ninth Circuit affirmed summary judgment in favor of Guam taxpayers in their class action lawsuit against the territorial government. Guam had excessively withheld income taxes to support government spending. Some taxpayers got their refunds through an “expedited refund” process that devolved into arbitrariness and favoritism. The district court had certified a class of taxpayers who were entitled to but did not receive timely tax refunds.Duncan then filed a purported class action challenging the Virgin Islands' income tax collection practices. Duncan alleged that the Territory owed taxpayers at least $97,849,992.74 in refunds for the years 2007-2017, and that, for the years 2011-2017, the Territory failed to comply with the requirement in Virgin Islands Code title 33, section 1102(b), that the Territory set aside 10 percent of collected income taxes for paying refunds, leaving the required reserve underfunded by $150 million. The district court denied class certification, citing Duncan’s receipt of a refund check from the Territory during the pendency of her lawsuit; the check, while not the amount Duncan claims, called into question Duncan’s standing and made all of her claims atypical for the putative class. The Third Circuit vacated, rejecting the conclusion that the mid-litigation refund check deprived Duncan of standing and rendered all of her claims atypical. In evaluating whether Duncan was an adequate representative, the district court applied an incorrect legal standard. View "Duncan v. Governor of the Virgin Islands" on Justia Law

After a judicial foreclosure proceeding for delinquent property taxes, the county generally sells the land at a public auction and pays any proceeds above the delinquency amount to the owner upon demand. Ohio's 2008 land-bank transfer procedure for abandoned property permits counties to bring foreclosure proceedings in the County Board of Revision rather than in court and authorizes counties to transfer the land to landbanks rather than sell it at auctions, “free and clear of all impositions and any other liens.” The state forgives any tax delinquency; it makes no difference whether the tax delinquency exceeds the property’s fair market value. The Board of Revision must provide notice to landowners and the county must run a title search. Owners may transfer a case from the Board to a court. After the Board’s foreclosure decision, owners have 28 days to pay the delinquency and recover their land. They also may file an appeal in a court of general jurisdiction. Owners cannot obtain the excess equity in the property after the land bank receives it.After Tarrify’s vacant property was transferred to a landbank, Tarrify sued under 42 U.S.C. 1983, claiming that the transfers constituted takings without just compensation. The Sixth Circuit affirmed the denial of Tarrify’s motion to certify a class of Cuyahoga County landowners who purportedly suffered similar injuries. While the claimants share a common legal theory—that the targeted Ohio law does not permit them to capture equity in their properties after the county transfers them to a land bank—they do not have a cognizable common theory for measuring the value in each property at the time of transfer. View "Tarrify Properties, LLC v. Cuyahoga County" on Justia Law