Worth v. City of Rogers

• Decision Date: 21 November 2002
• Docket Number: No. 01-1048.,01-1048.
• Citation: 351 Ark. 183,89 S.W.3d 875
• Parties: Clarence J. WORTH, et al. v. CITY OF ROGERS, et al.
• Court: Arkansas Supreme Court

89 S.W.3d 875

351 Ark. 183

Clarence J. WORTH, et al. v. CITY OF ROGERS, et al.

No. 01-1048.

Supreme Court of Arkansas.

November 21, 2002.

COPYRIGHT MATERIAL OMITTED

The Evans Law Firm, P.A., by Marshall Dale Evans, Fayetteville; Hirsch Law Firm, P.A., by E. Kent Hirsch, Springdale, for appellants.

Matthews, Campbell, Rhoads, McClure, Thompson & Fryauf, P.A., by David R. Matthews, Rogers; Robin Green, Bentonville; Jim Clark, Rogers; Clark & Spence, by George Spence, for appellees.

JIM HANNAH, Justice.

This is an action pursuant to Article 16, Section 13, of the Arkansas Constitution to protect the inhabitants of Benton County, the City of Rogers, Rogers School District No. 30, Bentonville School District No. 6, and Siloam Springs School District No. 21 from the enforcement of an illegal exaction. Appellants Clarence J. Worth, et al., appeal an order of class certification under Ark. R.App. P. — Civ. 2(a)(9). Appellants allege that the trial court erred in permitting citizens to opt out from the class, that the trial court erred in failing to prohibit communication and solicitation of the class, and that the trial court erred in denying a motion for recusal. The Appellees agree that the opt-out provisions of Rule 23 are not applicable to the injunctive relief Appellants seek, which is the "roll back" of millage rates for ad valorem tax. The Appellees allege that the relief sought by Appellants requesting a refund of ad valorem taxes to taxpayers in the amount overcharged by the noted taxing units should be subject to opt out allowed under Rule 23. Appellees cross-appeal, asserting the trial court erred in restricting attorneys from making public statements about opting out of the class.

We hold that, under the terms of Article 16, Section 13, of the Arkansas Constitution, the parties to an illegal-exaction suit include all citizens of the county, city, or town affected by the illegal exaction. Because all citizens are parties to the constitutionally created class, the right to opt out as developed under Ark. R. Civ. P. 23, is not applicable in an illegal-exaction suit. We further hold that communication with the affected citizens must be unfettered to determine whether any alleged illegal exaction may have been voluntarily paid, and therefore, not subject to suit under Article 16, Section 13.

Appellants also attempt to appeal the denial of their motion to recuse. The appeal before us is an interlocutory appeal from an order granting a motion to certify a class as allowed under Ark. R.App. P. — Civ. 2(a)(9). The issue of the denial of the motion to recuse may not be heard on this interlocutory appeal. In any event, the issue is moot here because the issue of recusal is the subject of a Petition for Writ of Mandamus, or in the alternative, for Writ of Prohibition, which is presently pending before this court.

Facts

On April 25, 1997, Appellants filed a lawsuit in Benton County alleging that taxing units, including Benton County, City of Rogers, Rogers School District No. 30, Siloam School District No. 21, and Bentonville School District No. 6, were required to make calculations for "roll back" of millage rates for ad valorem taxes under Amendment 59 of the Arkansas Constitution, and that they had not done so. On May 2, 1997, Appellants filed a separate action alleging that the noted taxing units had not "rolled back" the millage rates for ad valorem taxes required after a county-wide reappraisal. These two suits were consolidated by an order dated January 23, 1998. Appellees filed a motion to dismiss the consolidated action, which was treated as a motion for summary judgment. The motion was granted. This court reversed that decision and remanded the case for further proceedings in Worth v. City of Rogers, 341 Ark. 12, 14 S.W.3d 471 (2000) (Worth I). Thereafter, on May 2, 2001, the case of Larry Timmons v. Benton County, Benton County Case No. CIV-97-361-2 was also consolidated with the two above noted cases.

Appellants below are requesting that the trial court determine if a "roll back" is required, and if so, the Appellants are requesting that the trial court order a refund of ad valorem taxes to taxpayers in the amount overcharged by the noted taxing units, less cost, expenses, and a reasonable and adequate attorney's fee as determined by the trial court.

On June 22, 2001, the trial court entered a class certification order. It provides an opt-out choice to the class members, as set out in a Notice attached to the certification order. It also prohibits counsel for the Appellees from contacting class members or making public statements about opting out and not opting out.

Standard of Review

This court reviews class certification under an abuse-of-discretion standard. Cheqnet v. Montgomery, 322 Ark. 742, 911 S.W.2d 956 (1995). An abuse of discretion can be shown by proving bias or prejudice. Massongill v. County of Scott, 337 Ark. 281, 991 S.W.2d 105 (1999); Echols v. State, 326 Ark. 917, 936 S.W.2d 509 (1996).

Opt Outs

Appellants allege that the trial court erred in allowing opt outs. We hold that in an illegal-exaction case, taxpayers may not opt out of the suit. The right of opt out as developed under Rule 23 does not apply to illegal-exaction suits. Under Ark. R. Civ. P. 23, class members may opt out of a class action if they are not satisfied with the complaint or remedies asserted. USA Check Cashers of Little Rock, Inc. v. Island, 349 Ark. 71, 76 S.W.3d 243 (2002). USA Check Cashers involved a class action created under Ark. R. Civ. P. 23. In a class action established under Rule 23 of the Federal Rules of Civil Procedure, class members have an absolute right to be excluded from the case if they exercise that right within the time allowed under Rule 23(c)(2). Sarasota Oil Co. v. Greyhound Leasing and Fin. Corp. 483 F.2d 450 (10th Cir.1973). If, in a class action created under Rule 23, a forum state wishes to bind the rights of an absent plaintiff concerning a claim for money damages or similar relief at law, the State must provide minimal procedural due process, which includes, at the least, that an absent plaintiff be provided an opportunity to remove himself or herself from the class by executing and returning an "opt out" or "request for exclusion" form to the court. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985).

Rule 23 creates a suit involving a class that is comprised of many claims, often small claims, and the class-action suit is created to avoid the problems such claims typically present, such as procedural complexities involving numerous joinders, wholesale intervention, and large numbers of lawsuits which would be inefficient and unmanageable. BNL Equity Corp. v. Pearson, 340 Ark. 351, 10 S.W.3d 838 (2000). This court further noted in BNL Equity that without a class action, "numerous meritorious claims ... might go unaddressed" because alone they are too small to prosecute. See BNL Equity, 340 Ark. at 361, 10 S.W.3d 838. The rationale of the class action is to manage litigation involving numerous class members who would otherwise all have access to court via individual lawsuits. Croyden Assoc. v. Alleco, Inc., 969 F.2d 675 (8th Cir. 1992). To bring a class action under Rule 23, it must be found to be a superior means as opposed to pursuing individual remedies. Drew v. First Fed. Say. & Loan Ass'n. of Ft. Smith, 271 Ark. 667, 610 S.W.2d 876 (1981). A class action under Ark. R Civ. P. 23 binds together for litigation a number of claims of individuals because they are similarly situated, and because their claims can best be litigated under a class action established under Rule 23. BNL Equity, supra.

However, although an illegal-exaction case is a class action, it is not a class action established under Rule 23. It is created by our Constitution. Article 16, Section 13, of the Arkansas Constitution provides:

Any citizen of any county, city or town may institute suit in behalf of himself and all others interested, to protect the inhabitants thereof against the enforcement of any illegal exactions whatever.

Ark. Const. Art. 16, § 13. Our common law makes an illegal-exaction suit under Article 16, Section 13, of the Arkansas Constitution a class action as a matter of law. Frank v. Barker, 341 Ark. 577, 20 S.W.3d 293 (2000); City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229 (1982). An illegal-exaction claim is by its nature in the form of a class action. Hamilton v. Villines, 323 Ark. 492, 915 S.W.2d 271 (1996). An illegal-exaction suit is a constitutionally created class of taxpayers, and suit is brought for the benefit of all taxpayers.

Unlike a class action created under Rule 23, an illegal-exaction suit does not bind together the claims of a number of persons in order to more effectively litigate the claims. Because individual claims that might be compromised are not at issue, the concerns about allowing opt outs are not present. A taxpayer either participates in the illegal-exaction suit already filed, or in no lawsuit on the illegal exaction. By the terms of the Arkansas Constitution, Article 16, Section 13, every inhabitant of the area affected by the alleged illegal exaction is a member of the class. Every citizen who is an inhabitant of the affected area is regarded as a party to the illegal-exaction lawsuit and is bound by the judgment. Cash, supra; Rigsby v. Ruraldale Consol. Sch. Dist. No. 64, 180 Ark. 122, 20 S.W.2d 624 (1929). As this court stated in McCarroll v. Farrar, 199 Ark. 320, 134 S.W.2d 561 (1939), if an illegal-exaction suit were not a bar to another suit, one citizen after another might institute suit for himself or herself, and this could continue until every citizen in the state had sued. The doctrine of res judicata applies. McCarroll, supra.

An opt out pursuant to Rule 23 is not possible in an illegal-exaction lawsuit. The Arkansas Constitution makes each taxpayer a party. What is at issue in an...