RANCHO CUCAMONGA, Calif. - Anaheim, Calif. is best known to tourists as the home of Disneyland and Knott's Berry Farm. But to the California Credit Union League, this city in Orange County has been the defendant in a case that has dragged on for six years stemming from a lawsuit filed by the California Credit Union League against the city because it charged credit union employees, officers and volunteers a 13% occupancy tax at the Disneyland Hotel during the league's 1993 Annual Meeting and Convention. In the latest exchange of documentation, petitions and appeals between the CCUL and Anaheim-and the renaming of the case at least four times depending on who's the petitioner and the defendant-the city is appealing a lower court's re-affirmed decision that went against them. In response, the league has submitted a brief prepared by its retained counsel of Ott and Hoffman of Glendale, Calif. on why the case doesn't warrant the attention of the U.S. Supreme Court. "This case is about a municipality so intent on maintaining its taxing authority that it seeks to circumvent plain statutory tax immunity for federal credit unions by tortured semantics," stated the California Credit Union League in its 23-page brief filed Jan. 18. "By its instant petition, Anaheim refuses to heed the sound analysis and unambiguous decisions issued by both the district court and court of appeals which flatly rejected its strained argument. Instead, money is the issue." In a re-affirmation of its own 1996 opinion, the 9th Circuit Court of Appeals ruled in Sept. 1999 that municipalities cannot charge federal credit union employees, officers and volunteers - and by extension federal employees - hotel occupancy taxes when they travel on business. Anaheim appealed the lower court's 1996 ruling to the U.S. Supreme Court. The high court subsequently overturned the 9th Circuit in 1997 because it ruled in another case that year that the U.S. government needed to be a co-plaintiff in these types of cases. When the Department of Justice entered the case on the side of the CCUL, the 9th Circuit Court of Appeals re-affirmed its decision and ruled that since federal credit unions are instrumentalities of the federal government, when employees are conducting credit union business, they "stand in the government's shoes." In addition, since Section 1768 of the Federal Credit Union Act immunizes federal credit unions from state and municipal taxes, credit union employees are immune from paying these taxes when acting as agents of the credit union, the appellate court ruled. Joe McDonald, vice president and general counsel, CCUL told Credit Union Times he hopes the U.S. Supreme Court "will listen to our arguments about not granting certiorari and let the decision of the 9th Circuit Court stand. It was a well thought out decision on the issue and there is no reason for it to be reviewed and gone over by the (U.S.) Supreme Court." McDonald stressed that the case actually involves two issues - tax exemption, and the status of federal credit unions as federal instrumentalities. In its petition for a writ of certiorari, Anaheim agreed that it cannot tax a federal credit union. But it argued that the 9th Circuit Court made a mistake in its ruling, because hotel occupancy taxes - also known as "transient occupancy" taxes - are assessed on credit union employees, not the credit union itself, and Section 1768 applies only to the credit unions. Therefore, the city argued, the tax does not violate the law. One of the arguments offered by Anaheim was that the 9th Circuit opinion conflicts with a 1985 4th Circuit opinion, United States v. Montgomery County, which held that the county could constitutionally impose a transient occupancy tax on outpatients of the National Institutes of Health. McDonald accused the city of "inaccurately preparing materials for the court." He added that "the Court doesn't like misuse of the law." "This has nothing to do with whether employees of a federal credit union doing credit union business can be lawfully taxed," the CCUL brief stated. "The decision in Montgomery County does not even discuss employees of the NIH, much less render a holding concerning employees of a federal instrumentality. And Anaheim admits as much." McDonald is optimistic the high court will agree with the CCUL's arguments and refuse to hear the case. "Once we get this resolved in our favor, it will be beneficial to all credit unions and all federal instrumentalities," he explained, adding that "Anaheim didn't imagine the scope of the issue when they did what they did." Asked whether he knew if other federal instrumentalities were involved in similar tax-related situations with Anaheim, McDonald said the California Credit Union League had been contacted by the Department of Defense and the Department of the Army for meetings. The city of Anaheim had 30 days from the date of the brief to respond. However due to a death in the family of Moses Johnson from the Anaheim City Attorney's Office, the league granted an extension to the deadline. -
ekingoff@cutimes.com
