Guam: Calvo Admin Ordered To Pay $2.2M In Tax Refund Case

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Stems from 2011 tax refund class-action lawsuit

By Shawn Raymundo and Kyle J Daly

HAGÅTÑA, Guam (Pacific Daily News, April 10, 2016) – The District Court of Guam on Friday ordered the Calvo administration to pay about $2.2 million in attorneys’ fees, which includes costs and anticipated interest, in a case that could be heard by the U.S. Supreme Court.

The case stems from a 2011 class-action lawsuit related to the government of Guam’s inability to pay tax refunds in a timely manner.

In 2013, the local federal court ordered the administration to pay all error-free refunds within six months of a tax return filing. Since then, the Calvo administration has been challenging the mandate.

After losing an appeal to the U.S. Ninth Circuit Court, the administration then appealed the nation’s highest court. The local federal court’s order to pay attorneys’ fees in the case — about $1.7 million, plus costs and anticipated interest — comes prior to the Supreme Court making a decision whether to hear the case or not.

"We hoped the District Court would grant a stay on the payment of attorneys’ fees until the Supreme Court addressed the case," Oyaol Ngirairikl, the governor’s office communications director, stated in a press release from Adelup issued Friday.

"If the case does move forward with the Supreme Court and we win, then the attorneys would have to repay this amount," the release said.

The Supreme Court recently asked plaintiffs in the case to respond to the Calvo administration’s challenge to the injunction. The court initially requested a response from the plaintiffs that was due on March 3, however, one of their attorneys, Ignacio Aguigui, told Pacific Daily News last month that he had instead filed a waiver of response in order to preserve resources.

"Because we’ve prevailed so far on so many levels, why go through another one? That’s the gist of it," he previously said.

Aguigui had said that just because the Supreme Court requests a response doesn’t mean they will hear the case.

"It just means they want to hear from us," he said.

Late last month, the court again asked the plaintiffs to respond to the Calvo administration’s writ of certiorari, which is a petition asking the Supreme Court to review a lower court’s ruling — in this particular case, the 2011 class-action lawsuit that resulted in the District Court of Guam’s federal court order.

"The fact is now that the Supreme Court has gotten back to them and said ‘that’s not good enough,’" said Arthur Clark, chief policy adviser to Gov. Eddie Calvo. "So they do want to hear from them."

From his perspective, Clark said he believes the high court has an interest in the case.

"The only way I can interpret that is they do have an interest," Clark said, while stressing that "it doesn’t mean they’re going to grant cert or deny cert."

Adelup’s press release issued Friday states the administration believes the Supreme Court has an interest in the case because it wants a response from the plaintiffs.

In a letter dated March 31, Daniel Girard of Girard Gibbs LLP, which also represents the plaintiffs, asked the court for a 30-day extension to file the response — moving the due date from April 25 to May 25. He wrote that the attorneys in the case are currently in pretrial preparations for other cases.

"An extension in this matter will not prejudice petitioners," Girard wrote, adding: "The extension also will not prejudice class members, who will continue to benefit from the District Court’s injunction and the Ninth Circuit’s mandate."

The court granted the request earlier last week.

On April 1, the justices of the Supreme Court were scheduled to hold conference, which is when they consider the latest petitions filed.

The Calvo administration’s petition was listed for distribution to the justices for conference.

It’s unclear whether the case was discussed among the justices.

The administration has continued to challenge the injunction, arguing it ties the government’s hands financially.

"In this case, the Ninth Circuit tied Guam’s hands by affirming an onerous injunction that required Guam to repay all taxes with six months of the filing of a refund claim," the petition states.

After losing on appeal to the U.S. Ninth Circuit Court last year, the administration had until Dec. 31 to file the petition with the U.S. Supreme Court for possible consideration of the case.

In December, the governor’s legal team, which includes the global law firm Kirkland and Ellis, first filed an application, asking the court to maintain the stay on the government’s mandate to pay the plaintiffs’ attorney fees from the case. They also filed a request to extend the deadline to file their writ of certiorari.

The administration has argued that the government of Guam shouldn’t be liable for any attorney fees because Guam is to be treated as a federal agency tasked with collecting and refunding federal taxes pursuant to federal tax laws.

Justice Anthony Kennedy denied the application to stay the mandate, but approved the deadline extension, which gave the administration until Feb. 1 to file the writ.

 

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