Justia Class Action Opinion SummariesArticles Posted in Tax Law
Bass v. J.C. Penney Co., Inc.
Plaintiff filed a class action petition against J.C. Penney asserting that the internet retailer unlawfully charged Iowa sales tax on shipping and handling charges. J.C. Penney forwarded the tax to the Iowa Department of Revenue (IDOR) pursuant to the Iowa version of the Streamlined Sales and Use Tax Act (SSUTA). The district court granted summary judgment in favor of J.C. Penney. The Supreme Court affirmed, holding (1) the district court correctly granted J.C. Penney’s motion for summary judgment on Plaintiff’s statutory claims grounded in SSUTA, as the SSUTA does not create a private cause of action; (2) the district court did not err in granting summary judgment on Plaintiff’s claims related to the alleged unlawful payment of taxes on the ground that the remedies under Iowa Code 423.45(3) and 423.47 are exclusive remedies barring other claims for relief for wrongful payment of taxes under SSUTA; and (3) Plaintiff was not entitled to recover on her claims alleging shipping and handling misrepresentations. View "Bass v. J.C. Penney Co., Inc." on Justia Law
Howard v. Cullman County
Michael Howard appealed the grant of summary judgment entered against him in the action he commenced on behalf of himself and all other similarly situated taxpayers in Cullman County against Cullman County and its Revenue Commissioner Barry Willingham, in his official capacity. Howard sought a refund of property taxes he and other taxpayers paid in 2013. Howard sought a judgment declaring that, pursuant to former section 40-7-42, the Commission's levy of property taxes for October 1, 2012, through September 30, 2013, was invalid because it was done in May 2013 rather than at the Commission's first regular meeting in February 2013. He also sought the return of property taxes collected in 2013. The Supreme Court found that the trial court correctly concluded that the Commission's failure to follow the timing provision of former 40-7-42 did not invalidate its subsequent levy in 2013 of property taxes upon Howard and other property owners in Cullman County. Therefore, the Court affirmed summary judgment on all of Howard's claims in favor of Cullman County and the revenue commissioner. View "Howard v. Cullman County" on Justia Law
Perras v. H&R Block
In 2011, the IRS required tax preparers who were neither attorneys nor CPAs to pass a certification exam and obtain an identification number. H&R, a nation-wide tax service, passed anticipated costs to its customers by charging a “Compliance Fee.” H&R explained at its offices and on its website that the fee would cover only the costs to comply with the new laws. In 2011, the fee was $2; in 2012, the fee was $4. Perras sued on behalf of himself and a putative class. Perras alleged that the amount collected exceeded actual compliance costs. Perras sued under the Missouri Merchandising Practices Act. The district court compelled arbitration of the 2011 claims. Later, the court declined to certify the class, agreeing that the proposed class met the requirements under Federal Rule of Civil Procedure 23(a) of “numerosity, commonality, typicality, and fair and adequate representation,” but Rule 23(b)(3), requires that “the questions of law or fact common to class members predominate over any questions affecting only individual members.” The Eighth Circuit affirmed, reasoning that the Supreme Court of Missouri would likely conclude that the MMPA does not cover the out-of-state transactions. The law applicable to each class member would be the consumer-protection statute of that member’s state; questions of law common to the class members do not predominate over individual questions. View "Perras v. H&R Block" on Justia Law
Berera v. Mesa Med. Grp., PLLC
Berera worked at Mesa, a health care organization, as a nurse practitioner, 2011-2013. After Berera’s employment ended, she allegedly discovered that the wages on her W-2 did not reflect the wages that Mesa owed her. Berera sued in state court, asserting a class of current and former employees whom Mesa “forced to pay [Mesa’s] share of payroll taxes and other taxes and withholdings,” that this “forced payment resulted in the employees receiving less money than they earned,” and that Mesa paid employees “less than the wages and overtime compensation to which the employees were entitled.” The complaint contained no additional substantive allegations, but recited an unpaid wages claim under section 337.385 of the Kentucky Revised Statutes and claims of conversion and negligence under Kentucky law. The district court dismissed, reasoning that the Federal Insurance Contribution Act (FICA), 26 U.S.C. 3101–3128, which imposes a 7.65% tax on wages to fund Social Security and Medicare, requires parties seeking a refund to file a claim with the IRS before bringing a federal tax refund suit. The Sixth Circuit affirmed, agreeing that the purported state-law claims are truly FICA claims. View "Berera v. Mesa Med. Grp., PLLC" on Justia Law
Roethlein v. Portnoff Law Assoc.
In November 2002, Appellee Beverly Roethlein, an Allentown taxpayer, filed a class action complaint against Portnoff Law Associates, Ltd., and Michelle Portnoff, Esquire (the firm's sole shareholder) seeking recovery for unjust enrichment and violations of Section 502 of Act 6, Pennsylvania’s Loan Interest and Protection Law. Portnoff serves as a private tax collector for various municipalities and school districts, and had contracts with 22 municipalities to represent them in the collection of delinquent real estate taxes. Taxpayers would be charged $150 for the opening of a file and preparation of a demand letter; $150 for the filing of a lien and preparation of a second letter; and $150 for preparation and filing of a writ of scire facias. The contracts required the municipalities to enact an ordinance or resolution authorizing Portnoff to impose legal fees upon the delinquent taxpayer. From the time a file was sent to her for collection, Portnoff began charging 10% interest on the principal. The issue before the Supreme Court in this case was whether the Loan Interest and Protection Law provided taxpayers with a cause of action to challenge costs imposed for the collection of delinquent taxes or to seek damages and attorneys’ fees for improperly-imposed costs. Furthermore, at issue was whether Section 7103 of the Municipal Claims and Tax Liens Act authorized a municipality to recover the administrative costs it incurs in collecting delinquent taxes. After review, the Court concluded that Act 6 does not provide a cause of action for claims which do not involve the loan or use of money. Furthermore, the Court concluded Section 7103 of the MCTLA allows a municipality to recover fees it pays to a third-party tax collector for the purpose of collecting delinquent taxes. In light of these conclusions, the Court reversed the decision of the Commonwealth Court, and remanded the case to the Commonwealth Court for further proceedings. View "Roethlein v. Portnoff Law Assoc." on Justia Law
Hotels.com LP v. Pine Bluff Advertising & Promotion Comm’n
Several government entities (the class representatives) and all others similarly situated brought a class-action complaint against several online travel companies (OTCs) who marketed hotel rooms in Arkansas and elsewhere via the internet, asserting that the OTCs had failed to collect, or collected and failed to remit, the full amount of gross-receipts taxes imposed by the government entities on hotel accommodations. The circuit court granted the class representatives' motion to certify and certified two classes. The Supreme Court affirmed the circuit court's order granting class certification, holding that the circuit court did not abuse its discretion in (1) certifying the classes where the class representatives and putative class members had no adequate administrative remedies available to exhaust before filing suit; and (2) finding that the predominance requirement for class actions was satisfied.View "Hotels.com LP v. Pine Bluff Advertising & Promotion Comm'n" on Justia Law
McWilliams v. City of Long Beach
This dispute arose out of a class action lawsuit filed by Plaintiff, a resident of Defendant City, challenging the City's telephone users tax (TUT) and seeking refund of the taxes paid. The trial court ruled that class claims for a refund were barred under Woosley v. State and dismissed the case. The court of appeal reversed in part, holding that Plaintiff could file a class claim for a TUT refund under the recently decided Ardon v. City of Los Angeles. In Ardon, the Supreme Court held that the Government Claims Act (Act) permits a class action claim by taxpayers against a local government entity for the refund of an unlawful tax in the absence of a specific tax refund procedure set forth in an applicable governing claims statute. The City appealed, asserting that its municipal code contained an "applicable governing claims statute" barring class action claims for a tax refund. The Supreme Court affirmed, holding that a local ordinance is not a "statute" within the meaning of the Act.View "McWilliams v. City of Long Beach" on Justia Law
AT&T Mobility LLC v. Concepcion
Respondents filed a complaint against AT&T Mobility LLC ("AT&T"), which was later consolidated with a putative class action, alleging that AT&T had engaged in false advertising and fraud by charging sales tax on phones it advertised as free. AT&T moved to compel arbitration under the terms of its contract with respondents and respondents opposed the motion contending that the arbitration agreement was unconscionable and unlawfully exculpatory under California law because it disallowed classwide procedures. The district court denied AT&T's motion in light of Discover Bank v. Superior Court and the Ninth Circuit affirmed. At issue was whether the Federal Arbitration Act ("FAA"), 9 U.S.C. 2, prohibited states from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures. The Court held that, because it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," quoting Hines v. Davidowitz, California's Discover Bank rule was preempted by the FAA. Therefore, the Court reversed the Ninth Circuit's ruling and remanded for further proceedings consistent with the opinion.View "AT&T Mobility LLC v. Concepcion" on Justia Law
Ouwinga v. Benistar 419 Plan Servs., Inc.
Lesley and Fogg presented the Benistar 419 Plan to the Ouwingas, their accountant, and their attorney, providing a legal opinion that contributions were tax-deductible and that the Ouwingas could take money out tax-free. The Ouwingas made substantial contributions, which were used to purchase John Hancock life insurance policies. In 2003, Lesley and Fogg told the Ouwingas that the IRS had changed the rules; that the Ouwingas would need to contribute additional money; and that, while this might signal closing of the “loophole,” there was no concern about tax benefits already claimed. In 2006, the Ouwingas decided to transfer out of the Plans. John Hancock again advised that there would be no taxable consequences and that the Plan met IRS requirements for tax deductible treatment. The Ouwingas signed a purported liability release. In 2008, the IRS notified the Ouwingas that it was disallowing deductions, deeming the Plan an “abusive tax shelter.” The Ouwingas filed a class action against Benistar Defendants, John Hancock entities, lawyers, Lesley, and Fogg, alleging conspiracy to defraud (RICO, 18 U.S.C. 1962(c), (d)), negligent misrepresentation, fraudulent misrepresentation, unjust enrichment, breach of fiduciary duty, breach of contract, and violations of consumer protection laws. The district court dismissed. The Sixth Circuit reversed, View "Ouwinga v. Benistar 419 Plan Servs., Inc." on Justia Law
Basil. v. H & R Block, et al.
At issue before the Supreme Court was whether the common pleas court appropriately decertified a class based on its conclusion that a necessary element of the plaintiffs' proof (the presence of a confidential relationship) was not amenable to class treatment. In 1993, Sandra J. Basile commenced a civil action against H&R Block, Inc., H&R Block Eastern Tax Services, Inc. and Mellon Bank. She alleged, among other things, that the Block companies maintained maintained and breached fiduciary duties in connection with their "Rapid Refund" program. Basile sought to assert claims on behalf of herself and others who were similarly situated. However, summary judgment subsequently was awarded in Block's favor on the ground that it had no fiduciary relationship with the plaintiffs. The common pleas court's conclusion, in this respect, was based on the premises that Block was not the plaintiffs' agent and that no confidential relationship otherwise existed between the parties. In the ensuing appellate litigation, the court's decision on the agency score ultimately was conclusively sustained. In 2001, the Superior Court overturned the common pleas court's summary-judgment award, finding that Ms. Basile had proffered sufficient evidence to establish a prima facie case of a confidential relationship. In 2003, upon consideration of the appellate rulings, the common pleas court determined that class treatment was no longer appropriate. The common pleas court found that the need for individualized inquiries on the dispositive question of trust precluded a finding that common issues predominated. Upon review of the matter, the Supreme Court held that that the common pleas court did not err in decertifying the class based on its conclusion that the presence of a confidential relationship was not amenable to class treatment. The order of the Superior Court was reversed, the common pleas court's decertification order was reinstated, and the matter was remanded for further proceedings. View "Basil. v. H & R Block, et al." on Justia Law