Assignees Buy v. Combs

• Decision Date: 22 February 2013
• Docket Number: No. 03–10–00648–CV.,03–10–00648–CV.
• Citation: 395 S.W.3d 847
• Parties: ASSIGNEES OF BEST BUY, OfficeMax, and CompUSA, Appellants v. Susan COMBS, State of Texas Comptroller of Public Accounts, and Greg Abbott, Attorney General of Texas, Appellees.
• Court: Texas Court of Appeals

395 S.W.3d 847

ASSIGNEES OF BEST BUY, OfficeMax, and CompUSA, Appellants ¹

v.Susan COMBS, State of Texas Comptroller of Public Accounts, and Greg Abbott, Attorney General of Texas, Appellees.

No. 03–10–00648–CV.

Court of Appeals of Texas, Austin.

Feb. 22, 2013.

Edwin N. “Eddie” Graber, Law Office of Eddie Graber, Houston, TX, C. Brooks Schuelke, Perlmutter & Schuelke, LLP, Mark L. Perlmutter, Perlmutter & Schuelke, L.L.P., Austin, TX, for Appellants.

Gunnar P. Seaquist, Assistant Attorney General, General Litigation Division, Austin, TX, for Appellees.

Before Justices PURYEAR, PEMBERTON and ROSE.

OPINION

DAVID PURYEAR, Justice.

We withdraw the opinion and judgment dated July 20, 2012, and substitute the following opinion and judgment in their place. We deny the Assignees' motion for rehearing.

This appeal of the trial court's order granting the appellees' plea to the jurisdiction arises from the Assignees' settlement of two other lawsuits, which were filed as class actions. In those lawsuits (the “Retailer Suits”), the named plaintiffs sought a refund of Texas sales taxes that they and the putative-class members allegedly overpaidon items purchased from certain Best Buy, OfficeMax, and/or CompUSA stores (collectively, the “Retailers”) under mail-in rebate promotions. The named plaintiffs in the Retailer Suits contended that the Retailers had failed to refund sales tax to them on the rebated amounts. The Retailers and the putative classes tentatively settled the cases by agreeing that the Retailers would assign their refund claims to the putative-class members to allow the individual class members to pursue their assigned refund claims from the Comptroller.²

In the orders preliminarily approving settlement (“settlement orders”), the trial courts approved the classes for settlement purposes only and appointed settlement-class counsel to represent the settlement-class members in the Retailer Suits and in the presentation of the individuals' claims to the Comptroller.³ The orders provided that settlement-class counsel was “given full power of attorney to represent such Settlement Class Members in their individual claims against the Comptroller.” The settlement-class members, through settlement-class counsel, filed their assigned claims for refunds with the Comptroller as three aggregated claims, one for each Retailer. SeeTex. Tax Code Ann. § 111.104 (West 2008) (establishing procedure for filing tax-refund claims).⁴ Settlement-class counsel requested that the bulk payments be made payable to the settlement classes for distribution after notice to the class and final approval of the settlements by the trial courts. The Comptroller's staff initially denied the claims, and after a contested-case hearing before an administrative law judge (ALJ), the ALJ recommended that the refund denial be upheld. The Comptroller issued a ruling denying the refund claims.

The Assignees (and the settlement-class representatives) then filed this suit under tax code section 112.151, asserting that the Comptroller erred by (1) denying them authority to file their refund claims, (2) failing to toll limitations for Assignees whose claims arose within four years before the Assignees filed their original lawsuit against the Retailers, and (3) rejecting the Assignees' documentation of their refund claims. See id. § 112.151 (West Supp.2011) (allowing suit for tax refund after denial of claim). The Comptroller filed a plea to the jurisdiction, asserting that the Assignees did not properly exhaust their administrative remedies because settlement-class counsel lacked authority to file a refund claim on behalf of the individual settlement-class members. The trial court granted the plea to the jurisdiction, dismissing the Assignees' lawsuit.

The Assignees appeal the dismissal order, arguing that the trial court improperly sustained the Comptroller's plea to the jurisdiction, which they contend is an improper collateral attack on the orders in the Retailer Suits granting preliminary approval to those suits' settlement. The Assignees contend that the trial courts had jurisdiction to include pursuit of the individual class members' administrative claims before the Comptroller in the scope of class counsel's duties in the Retailer Suits. We will affirm the dismissal of the Assignees' lawsuit against the Comptroller.

BACKGROUND

The Retailer Suits

Some additional detail about the factual and procedural background of the Retailer Suits and this lawsuit is necessary to provide context for our decision. In our decision in Levy v. OfficeMax, Inc., 228 S.W.3d 846, 848–49 (Tex.App.-Austin 2007, no pet.), we provided a brief history of the Retailer Suits up to the time of that appeal. For our purposes in this appeal, we need only explain that although the Comptroller had been joined in one of the Retailer Suits (the one against Best Buy and OfficeMax), she filed a plea to the jurisdiction in that suit, which was granted. Id. at 848. The plaintiffs did not appeal that order. Id. The order appealed in Levy was a final order dismissing all of the plaintiffs' claims except for the putative-class representatives' individual claims for injunctive relief to compel assignments from the Retailers of the Retailers' refund claims against the Comptroller and for damages beyond the amount of any tax refund. Id. The plaintiffs appealed only the trial court's dismissal of the class claim seeking to compel an assignment of the Retailers' rights to file a refund claim with the Comptroller. Id. at 849.

As part of our decision, we explained that section 111.104(b) of the tax code precludes consumers from filing a refund claim with the Comptroller because they did not pay the tax “directly” to the state, but that they could file a refund claim with the Comptroller after procuring an assignment from the Retailers. Id. at 850 (construing section 111.104(b), which allows person who “directly” paid tax to state, that person's attorney, assignee, or other successor to file refund claim); see alsoTex. Tax Code Ann. § 111.104(b). We concluded that the district court had jurisdiction to consider the plaintiffs' claims against the Retailers to compel an assignment of the Retailers' refund rights and to consider whether a class should be certified. Levy, 228 S.W.3d at 852. We did not opine on whether the tax code allows a class action for refund claims. See id. at 851 (noting that neither tax code nor Comptroller's regulations contain express language allowing class actions for refund claims). Without opining on the merits of the plaintiffs' claims for assignments from the Retailers, we remanded the case to the district court for consideration of the plaintiffs' claims and motion to certify a class. Id. at 851 n. 2, 852.

After we issued our decision in Levy, the plaintiffs settled with the Retailers. As explained above, the terms of the settlement agreements required the Retailers to assign their rights to assert refund claims to the class members. The trial courts granted preliminary approval of the proposed Retailer settlements and certified classes only for settlement purposes. All three orders define the class similarly, as consisting of those persons or entities who were Texas residents that redeemed mail-in rebates for a taxable purchase made during a certain date range at one of the Retailers' Texas stores (and for CompUSA and Best Buy, via Internet or telephone order and shipped to a Texas address).

Only the CompUSA settlement order contains any analysis of the class-certification requirements of Texas Rule of Civil Procedure 42(a). The trial court found that the numerosity requirement was satisfied because there were over 200,000 potential class members, that the proposed class representatives' claims were typical of the other potential class members' claims, and that proposed class counsel and the proposed class representatives would adequately represent the class. SeeTex.R. Civ. P. 42(a). The trial court also found that the commonality requirement was met because all potential class members made purchases subject to sales tax and all mailed in applications for retailer rebates. In addition, the trial court found that two questions of law were common to all potential class members: (1) whether sales tax is ultimately due to the Comptroller on amounts that retailers refund to customers via rebates and (2) if sales tax is not due on amounts that retailers refund to customers via rebates, whether an injunction should be issued requiring the Retailers to refund sales tax to customers who had redeemed Retailer rebates.⁵

The CompUSA order also contains the only analysis of why the trial court found that the class should be certified as a mandatory class as provided in Texas Rule of Civil Procedure 42(b)(2). The trial court found that the declaratory relief sought predominated over any monetary relief, which was incidental to the declaratory judgment that sales tax is not due on retailer rebates and the injunctive relief requiring assignments. SeeTex.R. Civ. P. 42(b)(2) (allowing class action to be maintained on ground that “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole”). All three orders noted that notice to the class would not be required until settlement-class counsel sought final approval of the settlement and disbursement of any recovery “on behalf of the Settlement Class” because the settlement class was being conditionally certified for settlement purposes as a mandatory class under Rule 42(b)(2). CompareTex.R. Civ. P. 42(c)(2)(A) (allowing court to direct appropriate notice to class for class certified under Rule 42(b)(1) or (2)) withTex.R. Civ. P. 42(c)(2)(B) (requiring court to direct notice and opt-out opportunity to class members at time of class certification for classes...