There are three cases central to the issues raised by Parsons: Prince v. Arkansas State Highway Commission , 2019 Ark. 199, 576 S.W.3d 1 ; Bowerman v. Takeda Pharmaceuticals U.S.A. , 2014 Ark. 388, 442 S.W.3d 839 ; and Nelson v. Berry Petroleum , 242 Ark. 273, 413 S.W.2d 46 (1967). Parsons relies on Nelson , wherein the Arkansas Supreme Court reversed the lower court's dismissal of a complaint filed by an Arkansas citizen and taxpayer. Nelson , 242 Ark. at 274, 413 S.W.2d at 47. Nelson's complaint alleged that the defendant oil companies "have received unlawfully in excess of $3 million of taxpayers’ money; that the grades and quantities of asphalt sold ‘to the taxpayers of this state’ have been of a lower grade and quantity than paid for." Id. The supreme court held that the complaint stated a cause of action and that "it appears to be an action instituted pursuant to Article XVI, Section 13, of the Constitution of the State of Arkansas." Id. at 276, 413 S.W.2d at 48. The court stated,
This is a broad provision of our Constitution, and has been utilized in various types of actions. The case of Starnes v. Sadler , 237 Ark. 325, 372 S.W.2d 585 [(1963)], contains a comprehensive discussion of the meaning of the term, ‘Illegal Exaction.’ There, we said:
This Chancery Court action was instituted pursuant to Article XVI, Section 13, of the Constitution of the State of Arkansas, and the Chancery Court had jurisdiction of this Constitutional proceeding. This Constitutional provision is self-executing, and imposes no terms or conditions upon the right of the citizens there conferred. Samples v. Grady , 207 Ark. 724, 182 S.W.2d 875 ; 8 Ark. Law Review 129 (1954).
"Illegal Exaction" under the Arkansas Constitution means both direct and indirect illegal exactions, thus comprehending any attempted invalid spending or expenditure by any government official, Quinn v. Reed , 130 Ark. 116, 197 S.W. 15 ; Farrell v. Oliver , 146 Ark. 599, 226 S.W. 529.
"Illegal Exaction" means far more than the mere collection of unlawfully levied taxes. With little limitation, almost any misuse or mishandling of public funds may be challenged by a taxpayer action. Even paying too much for cleaning public outhouses has been held by our courts as basis for a taxpayer's right to relief, Dreyfus v. Boone , 88 Ark. 353, 114 S.W. 718. Any arbitrary or unlawful action exacting taxes or tax revenues may be restrained and annulled by a taxpayer affected by such procedure, Bush v. Echols , 178 Ark. 507, 10 S.W.2d 906 ; McClellan v. Stuckey , 196 Ark. 816, 120 S.W.2d 155 ; Park v. Hardin , 203 Ark. 1135, 160 S.W.2d 501 ; Brookfield v. Harrahan Viaduct Improvement District , 186 Ark. 599, 54 S.W.2d 689.
The remotest effect upon the taxpayer concerning any unlawful act by a tax supported program or institution may be enjoined under Article XVI, Section 13, of the Constitution of the State of Arkansas, Green v. Jones , 164 Ark. 118, 261 S.W. 43....
Our Court thoroughly discussed ‘illegal exaction’ in the case of Arkansas Association of County Judges v. Green , 232 Ark. 438, 338 S.W.2d 672, wherein jurisdiction of the Chancery Court was questioned and illegal exaction was involved. This Court stated that the theory of an illegal exaction does not necessarily involve an illegal tax citing the case of Lee County v. Robertson , 66 Ark. 82, 48 S.W. 901, wherein the Court was not dealing with illegal tax, but with the question of illegal use or appropriation of county funds.....
The case of Arkansas County Judges Association v. Green cited the case of Ward v. Farrell , 221 Ark. 363, 253 S.W.2d 353, wherein this Court stated concerning the involved Constitutional provision:
There is eminent authority for holding, even in the absence of an express provision of the Constitution, such as referred to above, that a remedy is afforded in equity to taxpayers to prevent misapplication of public funds on the theory that the taxpayers are the equitable owners of public funds and that their liability to replenish the funds exhausted by the misapplication entitles them to relief against such misapplication.
Nelson , 242 Ark. at 276–78, 413 S.W.2d at 48–49.
PFH relies on Bowerman , supra , wherein the United States District Court, Western District of Louisiana, certified the following questions to the Arkansas Supreme Court: (1) whether article 16, section 13 of the Arkansas Constitution provided Bowerman with an illegal-exaction claim; and (2) whether Nelson , supra , is still good law. Bowerman , 2014 Ark. 388, at 1–2, 442 S.W.3d at 840. The supreme court stated, "We answer both questions in the negative." Id. at 2, 442 S.W.3d at 840. Bowerman claimed that the use of public funds for reimbursements for a prescription drug, Actos
, and health-care costs associated with the drug's use gave rise to a public-funds illegal-exaction claim against the pharmaceutical company. Id. at 2–4, 442 S.W.3d at 840–41.
Bowerman states,
Article 16, section 13 of the Arkansas Constitution states that any citizen of any county, city, or town may institute suit, on behalf of himself and all others interested, to protect the inhabitants thereof against the enforcement of any illegal exactions whatever. An illegal exaction is defined as any exaction that either is not authorized by law or is contrary to law. Carnegie Pub. Library of Eureka Springs v. Carroll Cnty. , 2012 Ark. 128. Two types of illegal-exaction cases can arise under article 16, section 13 : "public funds" cases, where the plaintiff contends that public funds generated from tax dollars are being misapplied or illegally spent, and "illegal tax" cases, where the plaintiff asserts that the tax itself is illegal. Id. Here, the question before us involves a "public funds" case, because Bowerman only asserts that public funds were used improperly.
He does not assert that any of the taxes used to generate the public funds are illegal.
....
... Before a public-funds type of illegal exaction will be allowed to proceed, there must be facts showing that monies generated from tax dollars or arising from taxation are being misapplied or illegally spent. Dockery v. Morgan, 2011 Ark. 94, 380 S.W.3d 377. Any arbitrary or unlawful action exacting taxes or tax revenues may be restrained and annulled by a taxpayer affected by such procedure. Nelson[, supra]. Therefore, in order to state a claim for an illegal exaction, Bowerman must allege that the expenditure was illegal, misapplied, or arbitrary.
Bowerman does not assert that the action of the State in expending funds on Actos was unlawful. Nor can he, as the State is authorized by Arkansas Code Annotated section 19-5-306(10)(a)(viii) (Supp. 2013) to use State funds to pay for prescription drugs. Bowerman also does not allege that the funds were misapplied or arbitrarily spent. In fact, Bowerman does not allege any wrongdoing on the part of the State in expending these funds. All the wrongdoing that Bowerman alleges is on the part of the Respondents.
Even if Bowerman alleged wrongdoing in the use of state treasury funds, his allegations would not be sufficient to state a claim for illegal exaction. Actos was prescribed by physicians in the State of Arkansas, and certain amounts of the payments for these drugs were reimbursed by the State. Nothing in the Arkansas Code that indicates that the State could choose not to reimburse properly prescribed pharmaceuticals. Further, because the pharmaceuticals were prescribed by a physician, reimbursement for them cannot be said to be arbitrary. In Nelson , supra , the plaintiff alleged that the State overpaid for asphalt that was inferior to the grade of asphalt contracted by the State. Unlike Nelson , here the State paid reimbursement for exactly the drug that was prescribed. Thus, Bowerman's claim fails as a matter of law.
Bowerman , 2014 Ark. 388, at 4–6, 442 S.W.3d at 842–43. Further, the supreme court held that Nelson was inapplicable to the facts and circumstances of the case and declined to answer whether Nelson is still good law because it would be advisory to do so. Id. at 6–7, 442 S.W.3d at 843–44.
Finally, in Prince , supra , the Arkansas Supreme Court affirmed the dismissal of an illegal-exaction claim because there was an agreement between the Arkansas Highway Department and the United States Fish and Wildlife Service (USFWS). Part of the Department's agreement in obtaining an easement from USFWS for the expansion of Highway 79 was to demolish three bridges and restore the natural topography and reestablish native hardwood vegetation. Prince , 2019 Ark. 199, at 1–2, 576 S.W.3d at 2. To comply, the Department planned to invite bids and enter into a contract with the winning bidder on the bridge-demolition project, with an estimated cost of $...
