Federal judge says cell phone tax challenge case belongs in state court

By April Brown | Apr 11, 2017

SACRAMENTO — Judge Morrison England Jr. of the U.S. District Court for the Eastern District of California issued a memorandum and order on March 20 in the matter of Bekkerman v. Calif. Board of Equalization et al, remanding the case back to a state trial court.

The case was a class action suit filed in early 2016 by plaintiffs Alina Bekkerman, Brandon Griffith, Charles Lisser and Jenny Lee, who are all represented by attorney Daniel Hattis of Hattis Law in Bellevue, Wash.  

The defendants listed in the suit are the California Board of Equalization, State of California and cell phone providers AT&T, Sprint, T-Mobile and Verizon.  

The suit alleges that the defendants charged consumers sales tax on the full price of a cellphone when they purchased the device as part of a bundle at a discounted rate, which resulted in millions of dollars in overcharges.

Although the suit was originally filed in a state trial court, AT&T filed a motion to have the case moved to federal court in April 2016, citing that the case met the parameters established in the Class Action Fairness Act (CAFA) in terms of the number of participants and the amount of requested compensation.

England ruled against AT&T’s motion on March 20, stating that the Tax Injunction Act (TIA) does not permit suits involving state taxes. England cited a previous ruling from the Ninth Circuit Court, stating that the TIA’s “primary purpose is to prevent federal court intrusion into state tax collection, an area which deserves the utmost comity to state law and procedure.”

Furthermore, England said in the motion that even if the TIA does not apply, principles of federal and state comity, which are even more far reaching than the TIA, “mandate that federal courts should refrain from entertaining suits that risk disrupting state tax administration.”

England found that the state defendants must be deemed primary, therefore CAFA should not have been an appropriate basis to remove the case to federal court in the first place.

England also denied the plaintiffs’ request to be compensated for the fees and costs of moving the case to the federal court, stating that the primary defendant “had at least a colorable argument for removal.”

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Organizations in this Story

AT&T Sprint Corporation State of California State of California Board of Equalization T-Mobile USA U.S. District Court for the Eastern District of California Verizon Wireless

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