Williams Power successfully defends proceedings arising from improperly assessed utility user taxes
Client(s) Williams Power Company
Jones Day won a decisive victory for Williams Power Company, Inc. when Los Angeles Superior Court Judge Dzintra Janavs ruled that the City of Redondo Beach improperly assessed Williams for $56.7 million in utility user taxes ("UUT") for a period of 6 plus years from 1998-2004.
During a series of administrative hearings before the City Tax Administrator and a City-appointed Hearing Officer between 2005 and 2007, Williams was found liable for UUT for gas burned at an electric power plant owned and operated by AES Redondo, even though it was undisputed that AES Redondo alone used the gas subject to the tax. Trial on Williams' administrative writ of mandate before Judge Janavs took place over 8 hours on February 14, and resulted in a complete reversal of the findings of the City Tax Administrator and the Hearing Officer. Judge Janavs concluded that the City erred in assessing Williams for UUT because (1) the plain meaning of the City's Ordinance revealed that the tax is one against the "end user," and Williams was a supplier of gas rather than an "end user;" (2) the City violated the California Constitution by failing to obtain voter approval under Proposition 218 before expanding the tax to a non-user; (3) Williams could not be held jointly and severally liable with AES Redondo for gas use; (4) the assessment was void as ultra vires because it was not approved by the City Council or assessed by the Tax Administrator as required by the City's Ordinance; and (5) applicable statutes of limitations and the equitable doctrines of laches and estoppel barred a substantial portion of the assessment, in any event.
Because Williams was required to pay the City the $56.7 million in full in order to litigate the matter before Judge Janavs (under the state's so-called "pay to play" doctrine), Williams is entitled to a full refund, plus interest at 7% per annum, from the date the assessment was paid.
Williams Power Co. v. City of Redondo Beach, LASC Case No. BS 106625