Rhodes v. Kroger Co.

• Decision Date: 30 May 2019
• Docket Number: No. CV-18-63,CV-18-63
• Citation: 575 S.W.3d 387,2019 Ark. 174
• Parties: Kyle RHODES, Wesley Atwood, and Samantha Hudon, Individually and as Plaintiff Class Representatives, Appellants v. The KROGER CO.; Andrea Tyson ; and Patrick Scherrey, Appellees
• Court: Arkansas Supreme Court

2019 Ark. 174

575 S.W.3d 387

Kyle RHODES, Wesley Atwood, and Samantha Hudon, Individually and as Plaintiff Class Representatives, Appellants

v.The KROGER CO.; Andrea Tyson ; and Patrick Scherrey, Appellees

No. CV-18-63

Supreme Court of Arkansas.

Opinion Delivered May 30, 2019

Ludwig Law Firm, PLC, by: Gene A. Ludwig, Kale L. Ludwig, Little Rock, and Kyle P. Ludwig, for appellants.

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, by: Bruce A. McMullen ; and Friday Eldredge & Clark LLP, Little Rock, by: James M. Simpson, for appellees.

Josephine Linker Hart, Justice

Kyle Rhodes, Wesley Atwood, and Samantha Hudon (Rhodes), individually and as class representatives, appeal from a Pulaski County Circuit Court order granting judgment on the pleadings and dismissing their cause of action against the Kroger Company, Andrea Tyson, and Patrick Scherrey (Kroger). On appeal, Rhodes argues that Arkansas Code Annotated section 4-75-501 provides them with a vested right to equal pricing; the exceptions added by Act 850 of 2017 do not apply retroactively; and the circuit court abused its discretion in granting Kroger's motion for judgment on the pleadings when questions of fact remained. We affirm.

Prior to its amendment in 2017, section 4-75-501 stated:

§ 4-75-501. Manufactured products, coal oil, or dressed beef.

(a) It shall be unlawful for any person, company, corporation, or association engaged in the sale of any manufactured product, coal oil, or dressed beef, to:

(1) Sell any such manufactured product, coal oil, or dressed beef at a greater cash price at any place in this state, than the person, company, corporation, or association sells the manufactured product, coal oil, or dressed beef at other points in this state, after making due allowance for difference in cost of carriage or other necessary cost; or

(2) Willfully refuse or fail to allow to any person, corporation, or company making purchases of the manufactured product, coal oil, or dressed beef all rebates and discounts which are granted by them to other purchasers, for cash, of like quantities of the manufactured product, coal oil, or dressed beef.

(b)(1) Any person, company, corporation, or association violating any of the provisions of this section shall forfeit not less than two hundred dollars ($ 200) nor more than one thousand dollars ($ 1,000) for every such offense.

(2) Each unlawful sale or refusal or failure to allow the rebate or discount shall constitute a separate offense.

(c)(1) The penalty in cases pursuant to this section is to be recovered by an action in the name of the person, company, corporation, or association damaged by the greater price or refusal of, or failure to allow, the rebate or discount or in the name of the state at the relation of any prosecuting attorney in this state.

(2) The moneys thus collected shall be paid to the person, company, corporation, or association bringing the suit, and, when the suit is brought in the name of the state, the moneys collected shall be paid, one-fourth (1\4) to the prosecuting attorney bringing the suit and three-fourths (3\4) to the Public School Fund.

(3) Actions and suits under this section may be brought in any county in which the offense was committed by action at law or suit in equity in the circuit court.

(4) When the defendants are persons, companies, or associations, the service of summons upon the defendants in any county of this state shall be a sufficient service. Where the defendant is a corporation, the service of summons upon any agent of the corporation in this state shall be a lawful service.

(5) Several offenses under this section may be joined in one (1) action or suit.

Ark. Code Ann. § 4-75-501(a) – (c) (Repl. 2011).

On April 30, 2015, Rhodes filed a class-action complaint alleging that Kroger¹ had violated section 4-75-501(a)(2) through its Kroger Plus Card policies and procedures. Kroger answered and moved to dismiss. After the case was removed to federal court and remanded, a hearing was held in the circuit court. The circuit court granted the motion to dismiss as to Tyson and Scherrey but denied it as to Kroger. The case was again removed to federal court but was subsequently remanded.

On March 29, 2017, the General Assembly passed a bill entitled an "Act Concerning Arkansas Price Discrimination, to Allow Retailers to Offer Discounts to Customers, and to Declare an Emergency." Act of April 3, 2017, No. 850, 2017 Ark. Acts 4515. The governor promptly signed it, and the emergency clause made it effective as of April 3, 2017. Id. § 4. In addition to minor editorial changes to the statute, Act 850 added a new subsection that reads:

(b) This section does not apply to:

(1) A discount or rebate that is offered without charge to all purchasers on an equal basis, regardless of whether the purchaser chooses to accept or fulfill any of the nonmonetary conditions for receiving the discount or rebate; or

(2) A discount or rebate that is offered without charge to all members of a specified group, including without limitation senior citizens, students, or current or former members of the United States Armed Forces, if that group is not defined by race, color, sex, religion, or national origin of the purchaser.

Id. § 2(b)(1)–(2).

The Act also contains language that made the changes to the statute retroactive to January 1, 2012. Id. § 3.

Kroger moved for judgment on the pleadings. In large part, Kroger relied on the passage of Act 850 to assert that its Kroger-Plus-Card program and its senior-citizen discount were explicitly exempted by the amended statute. However, it further asserted that it did not violate section 4-75-501 because it did not "willfully refuse to give [Rhodes] discounts and [had] not willfully failed to allow [Rhodes] from getting discounts through the Kroger Plus Card." It claimed that the plaintiffs were repeatedly invited to obtain a Kroger Plus Card. Kroger urged the circuit court to apply the "functional-availability doctrine" which is recognized in federal court and routinely applied to Robinson-Patman Act cases.²

At the August 29, 2017 hearing, the circuit court, having considered the pleadings, motion, briefs, and arguments of the parties, granted Kroger's motion to dismiss. The circuit court made no written findings. Rhodes timely filed a notice of appeal.

Motions for judgments on the pleadings are not favored by the courts. LandsnPulaski, LLC v. Ark. Dep't of Corrections , 372 Ark. 40, 269 S.W.3d 793 (2007). However, it is appropriate if the pleadings show on their face that there is no merit to the suit. Id. Our standard of review for the granting of a motion to dismiss is whether the circuit court abused its discretion. See Doe v. Weiss , 2010 Ark. 150, 2010 WL 1253216. This court has described abuse of discretion as a high threshold that requires not only error in the circuit court's decision, but also that the ruling was made improvidently, thoughtlessly, or without due consideration. GSS, LLC v. CenterPoint Energy Gas Transmission Co. , 2014 Ark. 144, 432 S.W.3d 583. When we review the granting of judgment on the pleadings, we view the facts alleged in the complaint as true and in the light most favorable to the party seeking relief. LandsnPulaski, LLC, supra.

Because Rhodes's first two points are intertwined, we will address them together. Rhodes argues that Arkansas Code Annotated section 4-75-501 creates a vested right to equal pricing. Consequently, the changes to the statute made by Act 850, which he contends is substantive law, can only be applied prospectively. In support of his argument, Rhodes directs us to English v. Robbins , 2014 Ark. 511, 452 S.W.3d 566, in which we discussed the distinction between substantive law and procedural law. The English court noted that the plain language of an act is not the only consideration in determining whether a statute can be applied retroactively—even express language that a statute is to be applied retroactively must still be scrutinized to determine whether it impairs or disturbs a contractual or vested right or creates a new obligation. Id. Laws involving substantive rights cannot be constitutionally applied retroactively. Id. The English court echoed the definition of a "substantive law as one that "creates, defines, and regulates the rights, duties, and powers of parties." 2014 Ark. 511, at 7–8, 452 S.W.3d at 571–72 (quoting Johnson v. Rockwell Automation, Inc. , 2009 Ark. 241, at 8, 308 S.W.3d 135, 141 ).

We reject Rhodes's argument that the original version of section 4-75-501 created a "vested right" to fair pricing. This argument misinterprets the nature of penal statutes. As this court stated in Nebraska National Bank v. Walsh ,

First. The prime object of every statute strictly penal is to enforce obedience to the mandates of the law, by inflicting punishment upon those who disregard them; and, in statutes primarily and properly penal the provision for punishment never rests in uncertainty, is never based upon a contingency. The general public is supposed to be injured by the violation of every penal statute, whether any special injury results to any particular individual or class of individuals or not. The punishment is provided as a sanction to the law, and is imposed for the public good, to deter others from the commission of like offenses.

68 Ark. 433, 436, 59 S.W. 952, 953 (1900).

Accordingly, the focus of section 4-75-501 is not to bestow a right on the public, but to prevent injurious conduct. Thus, Rhodes's reliance on English is misplaced. The Uniform Contribution Among Tortfeasors Act (UCATA), which was at issue in English is not a penal statute. Furthermore, although Act 116 of 2013 was titled "AN ACT TO CLARIFY THE MEANING OF THE UNIFORM CONTRIBUTION AMONG TORTFEASORS ACT," in effect it redefined the meaning of joint and several liability. In so doing, UCATA altered an injured person's right to collect the whole judgment from any of the multiple tortfeasors whose actions combined to injure the...