If you paid a Utility Users Tax to the City of Palo Alto as part of your telephone bill, your rights may be affected by a class action settlement.

What is the settlement about?

A settlement has been reached in a class action lawsuit brought against the City of Palo Alto. The lawsuit involves a Utility Users Tax (“UUT”) imposed by the City on persons who use telephone service in Palo Alto. The UUT is collected by telephone service providers on behalf of the City and included in users’ telephone bills. In 2015, Eileen Staats (“Plaintiff”), a former Palo Alto resident, filed the lawsuit on behalf of herself and other taxpayers. Plaintiff alleges that the UUT was unlawfully collected on certain tax-exempt telephone services. The City denies that any UUT was unlawfully collected.

The lawsuit has been “certified” as a class action and is pending in Department 1 of the Superior Court of California, County of Santa Clara, before the Honorable Sunil R. Kulkarni. It is titled: Staats v. City of Palo Alto (Case No. 2015-1-CV-284956). The Court has appointed Plaintiff to represent the class and Slovak, Baron, Empey, Murphy & Pinkney, LLP and Steele Cooper Law to serve as class counsel.

Plaintiff and the City have now settled the lawsuit. The Court will hold a hearing on September 2, 2021 to decide whether to approve the settlement.

Additional information about the lawsuit and important court documents may be found on the Important Documents and FAQs pages of this website.

Who is included in the settlement?

All members of the class will be bound by the settlement, unless they previously opted out of the class. The class includes all persons, individuals, non-corporate entities, and corporations who paid the City’s UUT imposed on certain telephone services between August 1, 2006 and December 18, 2014. A full definition of the class, including covered services, can be found at FAQ 3.

Please note that members of the class are only eligible for a refund payment under the settlement if they paid the City’s UUT on telephone service between December 24, 2013 and December 18, 2014. The Court issued a ruling on May 8, 2019 that limited eligible refund claims to this shorter time period. A copy of the Court’s ruling is available on the Important Documents page as the "Summary Adjudication Order."

If you are not sure whether you are included in the class, you can get more information on the FAQs page of this website.

What does the settlement provide?

The City has agreed to make $1,275,000 available as a “settlement fund.” Members of the class who purchased telephone service between December 24, 2013 and December 18, 2014 are eligible to receive the following refund payments from the settlement fund:

Five or Fewer Telephone Lines. Claimants with five or fewer telephone lines will receive a refund of $8.50 for each telephone line.

Six to Ten Telephone Lines. Claimants with six to ten telephone lines will receive a refund of $8.50 per telephone line for the first five telephone lines and $7.50 per telephone line for the remaining telephone lines.

More than Ten Telephone Lines. Claimants with more than ten telephone lines will receive a refund of $8.50 per telephone line for the first five telephone lines, $7.50 per telephone line for the next five telephone lines, and $6.50 per telephone line for the remaining telephone lines.

A telephone line qualifies for a refund if it was used for voice telephone calls or mixed voice/data telephone service between December 24, 2013 and December 18, 2014. Data-only telephone lines are not qualifying telephone lines.

The settlement fund may also be used to pay an “incentive award” to the Class Representative and any Court-approved attorney’s fees and costs, in a total amount not to exceed $425,000. If any balance remains in the settlement fund after payments are made to the class, the lawyers that represent the class, and Plaintiff, that balance will be returned to the City.

A copy of the Settlement Agreement may be viewed on the Important Documents page of this website.