NORTHWEST ENERGETIC SERVICES v. CALIFORNIA FRANCHISE TAX BOARD PART III
Former Revenue and Taxation Code Sec. 17942, which imposed a levy on limited liability companies registered to do business in California, measured by the limited liability company's total income regardless of whether the income derived from or was attributable to business within the state, violated the Commerce Clause of the U.S. Constitution as applied to a taxpayer that had no operations, property, inventory, employees, agents, independent contractors, or place of business in California, and did not solicit customers in California or make any deliveries to customers in California. Sec. 19717, which provides for an award of attorney fees to prevailing taxpayer in refund litigation but only if state's position was not substantially justified, is not the exclusive means by which taxpayer may recover fees. Trial court did not err in awarding fees under private attorney general statute where many taxpayers benefited as result of ruling that statute was unconstitutional, but erred in citing common fund doctrine as an alternative basis since fees would have to be paid from general state revenues. Award of fees in excess of lodestar was an abuse of discretion where lodestar calculation adequately recognized the expertise and skill of plaintiff's lawyers and nature of the work involved; trial court did not explain and record did not reveal why trial court considered the issues novel or difficult; other items cited by the trial court the importance of the constitutional rights preserved through the action, the results achieved, and the substantial benefits conferred on the public did not distinguish the action from other private attorney general cases; and burden of fee award fell on shoulders of taxpayers rather than being paid from a common fund or by a private party.
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