City of Los Angeles Settles Telephone Tax Class Action Lawsuit

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Yesterday, a California state judge preliminarily approved a class action settlement that will resolve claims the city of Los Angeles unlawfully charged residents and businesses a 10 percent telephone user tax.

Plaintiff Estuardo Ardon initially filed the class action lawsuit against the city of Los Angeles in December 2006. According to the class action lawsuit, the city implemented the tax on telephone services that were not taxable according to the Federal Excise Tax (FET). By filing the telephone tax class action lawsuit, Ardon sought refunds for the allegedly illegal taxes paid by Los Angeles residents and businesses. He asserted claims for declaratory and injunctive relief, money had and received, and unjust enrichment.

The city of Los Angeles agreed to pay up to $92.5 million to settle the class action lawsuit, putting an end to nearly nine years of litigation. The case was allowed to proceed as a class action lawsuit following a 2011 California Supreme Court decision that overturned decisions from two lower courts which ruled that the claims should be brought individually.

Under the terms of the class action settlement, Class Members include anyone who paid the telephone utility user tax for non-FET eligible services between October 2005 and March 2008. More 2 million people may be eligible for benefits from the class action settlement.

California Superior Court Judge Amy D. Hogue granted tentative approval to the settlement Thursday, finding the terms were “fair, adequate and reasonable.” Notice of the proposed class action settlement will be mailed to Class Members by Sept. 17, 2015.

Class Members of the Los Angeles phone tax settlement will be able to file a claim for a “standard refund” of $30 for residential landline service or $50 for business mobile or landline service, or they may elect the “full refund” option to receive a payment of 70 percent of the actual utility user tax they paid if they submit documentation of the relevant charges. Class Members who elect the full refund option will likely receive an average of $60 for landline claims and $145 for mobile claims.

A final fairness hearing has been scheduled for Feb. 25, 2016. Additional information about the telephone tax class action settlement will be posted on the website www.LATaxRefund.com. You can find detailed claim filing instructions in our Open Settlements section.

The Class is represented by Wolf Haldenstein Adler Freeman & Herz LLP, Tostrud Law Group PC, Cuneo Gilbert & LaDuca LLP and Chimicles & Tikellis LLP.

The Los Angeles Telephone Tax Class Action Lawsuit is Ardon, et al. v. City of Los Angeles, Case No. BC 363959, in the Superior Court of the State of California, County of Los Angeles.

UPDATE: On Dec. 2, 2019, Top Class Actions viewers started receiving checks from the Los Angeles telephone tax class action settlement worth as much as $260. Congratulations to everyone who filed a claim and got PAID!