Court of Appeal Affirms Fee Denial Under Special Shifting Provision and Private Attorney General Statute.
After winning a tax refund issue relating to California tax treatment of repatriated dividends paid by certain of its subsidiaries, Apple, Inc. moved to recover attorney’s fees of $683,492.73 from the State on two independent grounds. The trial court denied the request, a determination affirmed on appeal in Apple, Inc. v. Franchise Tax Bd., Case Nos. A128091/A129090 (1st Dist., Div. 5 Sept. 12, 2011) (certified for publication).
Apple first grounded fee recovery upon Revenue and Taxation Code section 19717, which does allow a fee award to a “prevailing party” if the State of California’s position in the proceeding was determined to not be substantially justified. That high standard was not met in this one, because no binding authority supported Apple’s position despite the lower court’s eventual determination that it was entitled to a refund.
The second ground for fee recovery was Code of Civil Procedure section 1021.5, California’s private attorney general statute. However, this provision did not require a different result because the benefit of the case vindicated primarily Apple’s personal economic interests and few tax refund cases will meet the private attorney general fee shifting standards. (Northwest Energetic Services, LLC v. Calif. Franchise Tax Bd., 159 Cal.App.4th 841, 875 (2008).)