Why Are Some People Getting Settlement Checks?

Gerrie Schipske

Many residents are reporting they are receiving a check for the “McWilliams vs. City of Long Beach” case. Some are receiving $27.50 and some $46. What is the case about and why does the City of Long Beach have to pay out $16.6 million?

Q. Who is McWilliams and why did he sue the City of Long Beach?

A. John McWilliams was a resident of Long Beach and in August 2006, he filed a claim with the city attorney, Bob Shannon. He asked to be refunded the money he asserted that the city had improperly collected on certain telephone services “during the prior two years.” The city did not respond. The city imposed a 10 percent TUT on amounts paid for telephone services by persons or entities located within the city. The TUT is paid for by service users (taxpayers) and collected by service providers (telephone companies). If a service user refuses to pay the TUT, the city could impose a 25 percent penalty.

Q. How much did Mr. McWilliams request to be refunded?

A. A little over $200.

Q. After the city refused to refund his telephone tax, what did the city do?

A. In September 2006, the City Council amended its TUT ordinance to remove any reference to the federal excise tax – but did so without seeking the approval of the voters under article XIII C of the California Constitution, commonly known as Proposition 218. The city unlawfully collected and continued to collect the TUT “on services that have been conclusively determined to be non-taxable under the Federal Excise Tax.”

Q. What did Mr. McWilliams then do?

A. He found a law firm that was suing the City of Los Angeles for its illegal collect of telephone taxes. The law firm filed a “class action” suit on behalf of Mr. McWilliams and all residents who paid the telephone tax.

Q. What did the City of Long Beach do in 2008?

A. In November 2008, after the complaint was filed, voters in Long Beach approved Measure G, which allowed the city to apply its tax to all charges for intrastate, interstate and international telephone communication services. McWilliams did not challenge in this proceeding the collection of the TUT as authorized by Measure G.

Q. How long did the lawsuit take until the final action?

A. The lawsuit was filed in 2006 as a class action – meaning on behalf of McWilliams and everyone who paid the telephone taxes to Long Beach. The case was initially dismissed because Long Beach claimed class actions were not allowed under city code and they could not refund to everyone who claimed a refund. It was appealed and eventually made its way to the Supreme Court in California. The court ruled that the class action was legal.

Q. Did the Supreme Court order payment?

A. No. The City of Long Beach could sense it was going to lose and agreed to settle the case for $16.6 million.

Q. Did the City of Los Angeles settle its case (Ardon vs. City of Los Angeles)?

A. The City of Los Angeles (“City”) has agreed to pay up to $92.5 million to settle a class action lawsuit seeking refunds of taxes collected for telephone services utilized from Oct. 19, 2005 to March 15, 2008.

Q. So how do people in Long Beach get a refund?

A. It is too late to file a claim. The cutoff was in 2018. Those that did file are receiving $27.50 for landline service or $46 for mobile telephone service.

Q. How much is paid in attorney’s fees and expenses for litigating for ten years?

A. The attorneys requested $4.15 million in fees and $125,000 in expenses.

Q. Where can I find out more about this class action?

A. http://www.lbtaxrefund.com/faq

gerrie@beachcomber.news

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