California Sued For Shortchanging Business Owners With IOUs
Nancy Baird, a resident of San Luis Obispo County who served for 29 years in the Army National Guard, asserts in her lawsuit that the IOUs conflict with the California Prompt Payment Act.
Under that law, Baird's complaint states, recipients of the IOUs were due a 0.25-percent daily penalty rate for interest, rather than the 3.75-percent annual interest rate the state pays on the IOUs.
The lawsuit also notes that Baird was unable to pay sales tax to the state -- with its own IOUs -- owed as a result of her sale to the California National Guard of uniforms and polo shirts for a military youth camp. She now owns a screen-printing and embroidery business.
The lawsuit in Sacramento Superior Court names only Baird as a plaintiff but was filed as a class-action suit in anticipation of more business owners joining her. If successful in proving that the state underpaid its many IOU creditors, the suit could have a significant financial impact on California's coffers. The complaint states that 450,000 IOUs worth about $2.6 billion were issued during the 2009 budget crisis.
H/T | Courthouse News