Case Summary for May 21, 2013

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Case Summary for May 21, 2013

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9:30 a.m. Tuesday, May 21, 2013

____________________________________________________________________________________________________

SC93020
State ex rel. William J. Sitton v. Jeff Norman, warden
Cole County
Jury selection process

Listen to the oral argument:

Sitton was represented during arguments by Craig A. Johnston, of the public defender's office in Columbia, and the warden was represented by Stephen Hawke, of the attorney general's office in Jefferson City.

William Sitton was convicted of involuntary manslaughter in July 2005 and sentenced to consecutive prison sentences of seven and 18 years for the stabbing death of a man. Sitton filed a Rule 29.15 post-conviction relief motion, which was overruled. The Lincoln County circuit court, where Sitton was convicted, allows potential jurors to opt out of jury service if they agree to perform six hours of community service and pay a $50 fee to cover administrative costs. Sitton learned about the opt-out program and brought this habeas corpus action (seeking release) in Cole County, where he is imprisoned, claiming the jury selection process violated state law and the United States and Missouri constitutions. The action was overruled by operation of law when the circuit court failed to rule on it within 90 days. Sitton appeals.

Sitton argues the trial court erred in convicting him. He contends his rights to due process and equal protection were violated because the opt-out practice for qualified jurors in Lincoln County does not meet the jury selection requirements under sections 494.400 through 494.505, RSMo. Sitton asserts the jury at trial did not represent a fair cross-section of the population. He argues he did not waive his right to bring the current action. Sitton contends he filed a motion for new trial, which raised the present claim, within 14 days of learning the facts underlying this claim and asserts he was unaware of the facts in the time frame for filing direct appeal or a Rule 29.15 motion. Sitton argues that he has established prejudice and that habeas corpus is the appropriate remedy in this situation.

Norman responds the trial court did not err in convicting Sitton. He argues Sitton’s rights were not violated because the trial court complied with all of the requirements of the state statutes. Norman contends Sitton waived his right to bring this claim by failing to present it to the trial court or bring it on direct appeal. He asserts this Court should dismiss the claim.

SC92853
St. Charles County, Missouri v. Director of Revenue
St. Charles County
Sales tax exemption

Listen to the oral argument:

St. Charles County was represented during arguments by Toby J. Dible, of the office of the St. Charles County counselor in St. Charles, and the director of revenue was represented by Deputy Solicitor General Jeremiah Morgan, of the attorney general's office in Jefferson City.

St. Charles County paid sales tax for sales in and for the St. Charles County Family Arena from March 2007 to February 2010. The arena operates on appropriations from St. Charles County, and proceeds are deposited into a county treasury fund for the arena. It hosts events such as graduations, church conferences, sporting events and concerts. At these events, the arena sells food concessions and merchandise. St. Charles sought a $922,857 refund from the director of revenue of these taxes under section 144.030.2(17), RSMo. It claimed exemption for fees and charges in or for a place of amusement, entertainment, recreation, games or athletic events owned or operated by a political subdivision. The director denied the refund. St. Charles sought review by the administrative hearing commission, which upheld the denial. The commission found the arena did not meet the statutory requirements for the exemption. St. Charles appeals.

St. Charles argues the administrative hearing commission incorrectly found that the arena is not exempt as a place of amusement under section 144.030.2(17). It contends the county benefits from all of the proceeds of the arena and uses the proceeds to pay county expenses for operating the arena or for other community benefits. St. Charles asserts it does not give the proceeds to private persons, firms or corporations. It argues the merchandise and concessions sales in the arena also should be exempt because they fall within the statutory requirements. St. Charles contends the sales are fees or other charges paid in or for a place of amusement and, therefore, are exempt.

The director responds the commission correctly found that the arena is not exempt as a place of amusement under section 144.030.2(17). The director argues that, to qualify under the statute, all of the proceeds from a place of amusement must benefit the municipality and cannot be given to any private person, firm or corporation. The director contends that “proceeds,” as defined in the statute, means “gross receipts,” not “net proceeds.” The director asserts the merchandise and concession sales are also not exempt under the statute, arguing the sale of merchandise and food is not considered a fee or charge as defined in the statute. The director contends the county may not benefit from sales tax refunds because the sales tax is unclaimed property.

SC92581
William Douglas Zweig, et al. v. The Metropolitan St. Louis Sewer District
St. Louis County
Storm water user charge

Listen to the oral argument:

Metropolitan was represented during arguments by John L. Guanoulakis, of Kohn, Shands, Elbert, Gianoulakis & Giljum LLP in St. Louis, and Zweig was represented by Richard R. Hardcastle, of Greensfelder, Hemker & Gale PC in St. Louis.

Several metropolitan sewer district customers filed an action claiming that the district’s storm water user charge was a tax in violation of the Missouri Constitution’s article X, section 22(a), commonly known as the Hancock amendment. The ratepayers sought declaratory and injunctive relief from the user charge, as well as a refund from the district. The trial court heard the case in two phases: first the declaratory and injunctive claims, then the refund claim. The court applied the factors set forth in Keller v. Marion County Ambulance District, 820 S.W.2d 301 (Mo. banc 1991), and determined the charge was a fee or tax. In the second phase regarding refund, the trial court overruled the ratepayer’s claim for refund and entered an order preventing the district from collecting the user charge. The trial court also granted the ratepayers’ motion for attorney fees, including a multiplier of two; out-of-pocket expenses and expenses for the refund claim. The district appeals the trial court’s finding that the user charge was a tax as well as the award of attorney fees. The ratepayers appeal the trial court’s decision overruling their motion for a refund.

The district’s appeal

The district argues the trial court erred in finding its storm water user charge was invalid or impermissible. It contends the court misstated and misapplied the law, as well as went against the weight of the evidence by applying the Hancock amendment factors to the user charge. the district asserts that the user charge was due after services were provided, that storm water services are continuous and that the charge was not blanket-billed but charged only to those receiving storm water services. It also argues the user charge is a variable rate charge based on each customer’s individual parcel area and is used solely to provide storm water services. The district contends the user charge is not a tax as defined by the Hancock amendment. It asserts the trial court should not have awarded attorney fees and expenses because the award was unreasonable, improper and contrary to state law. The district argues the multiplier on the lodestar (hours spent litigating case at a reasonable rate for the area) for attorney fees is not permitted. It contends fees for the refund claim are not recoverable because the ratepayers were not the prevailing party on that claim. The district asserts expenses and expert fees are not recoverable under the Hancock amendment or the declaratory judgment act, which provide only for costs.

The ratepayers respond the trial court correctly found the storm water user charge was an invalid or impermissible tax or fee subject to the Hancock amendment. They argue the trial court correctly applied the Keller factors to the matter. The ratepayers contend the user charge was billed on a monthly basis and not for services provided in the prior month. They assert there is substantial evidence the charge was blanket-billed and not for a service the user can accept or reject. The ratepayers argue that whether a service is ongoing is irrelevant to the matter here. They contend the trial court correctly awarded attorney fees and expenses and correctly applied the multiplier on the lodestar. The ratepayers assert the trial court correctly refused to reduce the award based on the refund claim. They argue they are entitled to recover all out-of-pocket expenses for this matter.

Ratepayers’ appeal

The ratepayers argue the trial court erred in finding the Hancock amendment refund claims are barred by section 139.031, RSMo. They contend the trial court misapplied and declared the law because section 139.031 does not apply to refund actions under the Hancock amendment. The ratepayers assert they are entitled to a refund of the district’s unlawful charges because the law does not support full denial of a refund on the facts. They argue all of the requirements for a refund under section 139.031 were met and they were entitled to a refund. The ratepayers contend the district’s storm water ordinance expressly authorizes refund of unlawfully collected charges. They assert section 139.031 was not intended to apply to class actions.

The district responds this Court should grant its claim regarding declaration and application of the Keller factors because the ratepayers did not challenge the claim. It argues the statutory tax protest requirements were not met to obtain a refund. The district contends the ratepayers are not entitled to a refund. It asserts the trial court properly weighed the evidence before overruling the refund request. The district argues the ratepayers failed to provide sufficient evidence to prove they were entitled to a refund. It contends this Court should overrule Ring v. Metro. St. Louis Sewer Dist., 969 S.W.2d 332 (Mo. banc 1982), because there are other, more appropriate remedies for tax refunds available.

Friend-of-Court arguments

Several state municipal organizations argue the trial court erred in finding the user charge was a tax because such a finding goes against the weight of the evidence. They contend utility charges were not considered taxes prior to November 1980. The organizations assert the attorney fees should not have been enhanced because enhancement is prevented by article X, section 23 of the state constitution. They argue applying a multiplier causes duplication of some factors already considered in calculating reasonable attorney fees. The organizations contend there were no exceptional circumstances to justify enhancement. They assert the trial court correctly refused to give refunds to ratepayers who did not file a protest under section 139.031 because no refund is authorized and the proper procedure must be followed to obtain a refund.

Several national waterworks and public works associations argue that storm water user charges based on surface area are normal in the water industry and are related directly to the cost of services provided by the storm water utility. They contend storm water fees have been upheld by a majority of state courts as a legitimate service. The associations assert recent amendments to the federal clean water act reflect the intent of Congress to uphold reasonable user fees.

The Missouri coalition for the environment foundation argues that impermeable surfaces contribute to drainage infrastructure degradation and stream health. It contends the district’s services are imperative and require adequate financial support. The coalition asserts there is a direct relationship between the user charge and the level of service provided to district customers.

SC92961
Lincoln Smith, et al. v. Brown & Williamson Tobacco Corporation
Jackson County
Wrongful death

Listen to the oral argument:

Smith was represented during arguments by Kenneth B. McClain, of Humphrey, Farrington & McClain in Independence, and Brown & Williamson was represented by Jeffrey S. Bucholtz, of King & Spalding LLP in Washington, D.C.

Lincoln Smith and other survivors of Barbara Smith, who smoked for approximately 60 years and died of a heart attack, brought this wrongful death action against Brown & Williamson Tobacco Corp. following her death. The survivors claimed negligence for failure to warn, failure to establish a reasonable dose, failure to establish a safer cigarette, strict liability for defective and dangerous product, fraudulent concealment, and conspiracy; they also sought punitive damages on all claims. At trial, the jury found Brown & Williamson 25 percent strictly liable for fault and liable for aggravating circumstances. It awarded $500,000 in compensatory damages and $20 million in punitive damages. On appeal, the court of appeals remanded (sent back) the case for a new trial regarding punitive damages with a mandate limiting the trial court’s authority to punitive damages. At the second trial, the trial court permitted both parties to present new evidence. Brown & Williamson submitted evidence of its 2004 merger with the R.J. Reynolds Company. At the conclusion of the evidence, the trial court overruled Brown & Williamson’s motion for a judgment notwithstanding the verdict. The survivors appeal the admission of the evidence regarding the merger at the second trial and the objections to juror testimony. Brown & Williamson appeals the trial court’s overruling of its motion for judgment notwithstanding the verdict.

The survivors’ appeal

The survivors argue the trial court erred in allowing Brown & Williamson to present evidence of the 2004 merger as well as the conduct of a non-party to the litigation. They contend Brown & Williamson that submitted this evidence solely to avoid punitive damages and that the trial court violated its authority on remand by allowing Brown & Williamson to adduce evidence not presented to the jury in the first trial. The survivors also assert the trial court should not have upheld Brown & Williamson’s objections to two jurors’ testimony because their testimony was proper. They further argue the jurors purposely withheld material information disclosing they had bias and prejudice to the case.

Brown & Williamson responds the trial court correctly allowed it to present evidence of the 2004 merger as well as the conduct of a party to the merger. It argues neither the mandate on remand nor the law of the case prevented admission of this evidence, which was admitted without a proper objection. Brown & Williamson contends the survivors waived objection to the evidence regarding the party to the merger by presenting it in his case. It asserts the survivors failed to preserve the claim that the jurors failed to disclose information. Brown & Williamson further argues the survivors failed to prove the jurors failed to disclose information regarding the merits of the litigation. It contends that this Court should not order a trial regarding only punitive damages or a remand to the court of appeals for reconsideration because both would be impermissible remedies.

Brown and Williamson’s appeal

Brown & Williamson argues the trial court erred in overruling its motion for judgment notwithstanding the verdict. It contends the survivors failed to make a case for punitive damages on the strict liability claim. Brown & Williamson asserts the survivors failed to present clear and convincing evidence of aggravating circumstances based on the same conduct presented at the first trial, for which Brown & Williamson could have been found liable. It argues that the survivors failed to present evidence beyond the risks inherent in all cigarettes and that a punitive damage award based on nothing more than manufacturing and selling ordinary cigarettes is preempted by federal law.

The survivors respond the trial court properly overruled Brown & Williamson’s motion for judgment notwithstanding the verdict. They argue Brown & Williamson’s implied preemption argument has been rejected expressly twice on appeal, as well as rejected by this Court in a prior case. The survivors contend they presented sufficient evidence to overrule the motion for judgment notwithstanding the verdict.