GM $120M Lawsuit against San Francisco

In a clear sign that GM and Cruise have given up on trying to succeed in San Francisco, they have filed a lawsuit to attempt to claw back taxes paid to the city back to 2016. Interesting choice to file it on 12/22/2023, the last work day before Xmas. The lawsuit was reported on by Bloomberg, SF Chronicle, SF Standard.

Of note

While other news publications concentrated on the complicated tax issues that GM is fighting with their lawsuit, I believe there are other issues of interest.

• The tax payments in question go all the way back to 2016. Yet it took GM till after the California DMV and the CPUC permitted citywide Cruise robotaxi service (and then later shut them down) before they actually filed the lawsuit.
• GM first approach the City of San Francisco in early 2020 about their taxes, and to resolve any potential disputes. Back I n the summer of 2020 the City clarified that it did not agree with the GM’s position. In December 2020 GM fully paid the assessed taxes and penalties. In September 2021, GM filed a claim for a refund of taxes and penalties. That claim was denied by the City. In other words, several yers ago the City fully evaluated the situation and let GM know that they indeed had owed those taxes.
• The GM lawsuit claims: The San Francisco Business and Tax Regulations Code (“Code”) is facially invalid. If this were true then San Francisco is suddenly on a severe financial precipice. This seems very doubtful.
• The lawsuit is also specifically emphasizes the 2019 Homelessness Gross Receipts Tax (“HGR”) and the 2022 Overpaid Executive Gross Receipts Tax (“OEGR”). Focusing on these two taxes together is quite disturbing. They appear to be fully acknowledging that they have paid their executives excessively, the very same people they recently fired, but they also do not want to pay taxes for people at the other end of the spectrum, those suffering from homelessness.

This lawsuit will undoubtedly take quite a while to move through the courts. Meanwhile, Cruise will wither in San Francisco.

Future of Cruise in San Francisco

GM/Cruise are very likely to lose the lawsuit. This means that they will get nothing out of filing it except to really piss off San Francisco officials. They knew this. It is, therefore, absolutely certain that they will not relaunch robotaxi service in San Francisco. And San Francisco is Cruise’s home office, where they have several thousand employees. I expect that Cruise will be closing this office, likely as part of the company being radically transformed. It’s a big deal.

But the Giants??

Yes, Cruise and the Giants have an enhanced partnership to further serve local residents and businesses, accelerate the electrified transportation system and improve road safety and environmental sustainability throughout San Francisco (wow, that sure sounds like impressive marketing speak)! But don’t worry sportsball fans. The Giants have a signed contract till at least 2025 so the embarrassing patches will continue.