Buckley Powder Co. v. State

• Decision Date: 19 December 2002
• Citation: 70 P.3d 547
• Docket Number: 00CA2265
• Parties: BUCKLEY POWDER CO., for itself and on behalf of similarly situated entities, Plaintiff-Appellee and Cross-Appellant, v. STATE of Colorado; Gale Norton, in her official capacity as Attorney General of the State of Colorado; Colorado Department of Revenue; Renny Fagan, in his official capacity as Executive Director, Department of Revenue; Dee Hartman, in his official capacity as Director, Division of Motor Vehicles, Department of Revenue; Larry D. Huls, in his official capacity as Assistant Director, Division of Motor Vehicles, Department of Revenue; and Jaki Berry, in her official capacity as Administrative Officer, Motor Carrier Services, Division of Motor Vehicles, Department of Revenue, Defendants-Appellants and Cross-Appellees.
• Court: Colorado Court of Appeals

70 P.3d 547

BUCKLEY POWDER CO., for itself and on behalf of similarly situated entities, Plaintiff-Appellee and Cross-Appellant, v.STATE of Colorado; Gale Norton, in her official capacity as Attorney General of the State of Colorado; Colorado Department of Revenue; Renny Fagan, in his official capacity as Executive Director, Department of Revenue; Dee Hartman, in his official capacity as Director, Division of Motor Vehicles, Department of Revenue; Larry D. Huls, in his official capacity as AssistantDirector, Division of Motor Vehicles, Department of Revenue; and Jaki Berry, in her official capacity as AdministrativeOfficer, Motor Carrier Services, Division of Motor Vehicles, Department of Revenue, Defendants-Appellants and Cross-Appellees.

No. 00CA2265.

Colorado Court of Appeals, Div. V.

December 19, 2002.

Certiorari Denied May 27, 2003.

Timmins & Associates, L.L.C., Edward P. Timmins, Jo Deziel Timmins, Denver, Colorado; King, Burke & Schaap, Thomas King, Salt Lake City, Utah; Richard C. Hutchison, Farmington, Utah, for Plaintiff-Appellee and Cross-Appellant.

Ken Salazar, Attorney General, Mark W. Gerganoff, Assistant Attorney General, Denver, Colorado, for Defendants-Appellants and Cross-Appellees.Opinion by Judge WEBB.

In this tax refund class action, defendants, State of Colorado, Colorado Department of Revenue, and various state officials (collectively, the state), appeal from the trial court's judgment certifying damages classes under C.R.C.P. 23(b)(3) and creating a common fund for the recovery of unconstitutionally collected taxes.On cross-appeal, plaintiff, Buckley Powder Co., for itself and on behalf of similarly situated entities, contends the trial court erred in limiting fees of its attorneys to $250,000 under § 13-17-203, C.R.S. 2002, and also erred in its award of prejudgment interest.We affirm.

I.Background

Buckley commenced this action challenging, as an unconstitutional burden on interstate commerce, amendments to Colorado's interstate and intrastate motor vehicle carrier registration fee and ownership tax statutes, Colo. Sess. Laws 1990, ch. 301, § 42-3-105(1)(a);Colo. Sess. Laws 1989, ch. 356, § 42-3-123(13)(b) & (b.3).Buckley sought class certification, injunctive and declaratory relief, and a refund of unconstitutional taxes collected between 1990 and 1994.

The trial court denied class certification, but granted Buckley's motion for summary judgment on the basis that the statutes, as amended, violated the Commerce Clause.The court denied Buckley's request for damages.Buckley appealed.

While its appeal was pending, the supreme court held that the amended statutes violated the Commerce Clause by differentiating between intrastate and interstate trucks as to both registration fees and ownership taxes.Riverton Produce Co. v. State,871 P.2d 1213(Colo.1994)(Riverton).In response, the state instituted a refund program pursuant to § 39-21-108, C.R.S.2002.

Relying on Riverton, a division of this court concluded the sole remaining issue in Buckley's appeal was the trial court's refusal to certify a class.The division remanded the case and directed the trial court to reconsider class certification.Buckley Powder Co. v. State,924 P.2d 1133(Colo.App.1996)(Buckley I).

The supreme court granted certiorari on the class certification issue, reversed in part, and remanded the case.State v. Buckley Powder Co.,945 P.2d 841(Colo.1997)(Buckley II).The remand instructed the trial court to consider whether to certify a class pursuant to C.R.C.P. 23(b)(3) for the purpose of refunding the unconstitutionally collected taxes.

On remand, the trial court certified two classes—interstate carriers who had paid registration fees between 1990 and 1994 on trucks driven less than 30,000 miles nationally (class II), and interstate carriers who had paid ownership taxes between 1990 and 1994 on trucks ten years old or older when registered (class III).These classes differed slightly from the classes initially proposed by Buckley.The trial court then appointed a special master to evaluate a common fund remedy and later adopted the special master's recommendation concerning creation of a common fund.

After a trial on damages, the court awarded common fund damages of $5,808,702 for class II and $320,588 for class III, to be paid through a refund of taxes otherwise payable in the current tax year using a plan to be developed by the court-appointed claims administrator.

The trial court limited fees of Buckley's attorneys to $250,000, the maximum under § 13-17-203, and awarded prejudgment interest only from 1995 to the date of judgment.Before the claims administrator presented a plan, the trial court certified the judgment as final under C.R.C.P. 54(b).

II.Priority of Statutory Refund Procedure

The state first argues the trial court could not certify a class pursuant to C.R.C.P. 23 because the state's "opt-in" refund program established by § 39-21-108 conflicts with a class action opt-out procedure under C.R.C.P. 23, and under C.R.C.P. 81(a) a specific statutory procedure prevails over a conflicting rule of civil procedure.We do not agree.

Even if we assume, without deciding, that the conflict posited by the state exists, nevertheless both Buckley I and Buckley II held the trial court erred in finding the statutory refund scheme to be the exclusive means for refunding taxes collected under the unconstitutional tax statutes.The division agreed with Buckley that "it is the obligation of the trial court, after declaring the collected tax unconstitutional, to provide it with a remedy."Buckley I,924 P.2d at 1136.Similarly, the supreme court concluded the trial court must consider a damages class under C.R.C.P. 23(b)(3) because the state does not have an "unfettered right to determine an appropriate remedy free from any judicial approval or supervision."Buckley II,945 P.2d at 848.Moreover, the opinions do not indicate that the state raised the C.R.C.P. 81(a) conflict issue before either court.

Hence, we reject the state's argument that the existence of this statutory scheme precludes class relief under C.R.C.P. 23(b)(3).

III.Class Certification

The state next argues the trial court erred in certifying the classes pursuant to C.R.C.P. 23(b)(3) because common issues of law or fact do not predominate and because a class is not the superior way to refund the unconstitutionally collected taxes.We disagree.

C.R.C.P. 23(b)(3) requires that "the questions of law or fact common to the members of the class predominate" and that "a class action is superior to other available methods for the fair and efficient adjudication of the controversy."

The trial court made detailed findings supporting class certification on both predominance and superiority grounds.

A.Predominance

In our view, the supreme court assumed predominance was already decided and consequently its remand instructions limited the trial court to considering superiority.

While recognizing that C.R.C.P. 23(b)(3) certification "is appropriate for classes seeking primarily monetary damages,"the supreme court instructed that on remand the trial court should determine whether the proposed classes meet the superior method requirement of C.R.C.P. 23(b)(3).Buckley II, supra,945 P.2d at 845, 848.In contrast to the multiple references to superiority, the remand instructions did not mention predominance.

Moreover, the predominance prong of the C.R.C.P. 23(b)(3) inquiry usually involves liability, not damages.See2 Herbert Newberg & Alba Conte, Newberg on Class Actions§§ 4.24-4.26 (3d ed.1992).Here, Riverton has resolved liability.Buckley II, supra,945 P.2d at 843.

Accordingly, we need not address the trial court's predominance analysis and instead focus our review on the trial court's finding of superiority.

B.Superiority

The state next asserts the trial court erred in determining that class treatment would be superior to the state's refund program because the trial court mistakenly found deficiencies in the refund program.We are not persuaded.

The fact intensive superiority inquiry seeks to determine the best mechanism for identifying claimants and processing their claims.SeeNewberg, supra,§§ 4.27, 4.44(the superiority requirement of rule 23(b)(3) entails a comparison of a class action to other available remedies and a determination of which procedure would achieve the fairest and most efficient adjudication of the controversy).

The party advocating class certification bears the burden of proof.Villa Sierra Condo. Ass'n v. Field Corp.,787 P.2d 661(Colo.App.1990).The decision to certify a class action lies within the trial court's discretion and will be affirmed unless clearly erroneous or an abuse of discretion.Friends of Chamber Music v. City & County of Denver,696 P.2d 309(Colo.1985).

Under C.R.C.P. 23(b)(3), the trial court has broad discretion in determining whether class certification is the superior means of adjudication.Nevertheless, if the parties could obtain the same relief without class certification, then a class is not the superior method as required by C.R.C.P. 23(b)(3), and certification should be denied.Buckley II, supra.

The need for some proof of individual damages does not preclude certification under C.R.C.P. 23(b)(3).Fed.R.Civ.P. 23 advisory committee note;seeToothman v. Freeborn & Peters,___ P.3d ___, 2002 WL 31600861(Colo.App. No. 01CA1142, Nov. 21, 2002).A class can prove its aggregate damages, thus making class certification appropriate, and then the court can appoint a master or magistrate to preside over individual damage proceedings.SeeNewberg, supra,§ 4.26.

Here, in remanding the case to determine whether class certification was the superior method, the supreme court noted, "An adequate [statutory] refund program is certainly relevant to the trial court's decision ...."Buckley II, supra,945 P.2d at 848.Thus, the superiority inquiry involves comparison...