Barnes v. City of Atlanta

BARNES, Judge,

concurring in part and dissenting in part.

I agree that OCGA § 48-5-380 applied to the plaintiffs’ refund claim, and thus concur fully in all that is said in Division 1 (a). But, because class counsel had the authority to act on behalf of the class members they represented and thus had the authority to file a refund request that tolled the running of the statute of limitation, I must dissent from Division 1 (b) and from that portion of Division 1 (c) of the majority opinion finding that the demand date of the Class I members was the date set by the trial court rather than the date that class counsel demanded a refund on behalf of Class 1.1 further would hold that the trial court erred in holding that class members who opt out *396of the class are not responsible for paying attorney fees, and thus dissent from Division 2. Finally, I dissent from Division 3 because I would find the City’s cross-appeal moot.

The history of this unusual class action suit is set out in the majority opinion. The trial court agreed with the plaintiffs early on that the City of Atlanta ordinance was unconstitutional, and the Supreme Court of Georgia affirmed, based on its earlier opinion in a similar case. As the trial court noted, the City has “fought the case as hard as possible, despite clear law on point governing the issue.” The difficult legal issues have always been related to determining the scope of the class and the amounts to be refunded to the attorneys who paid the unconstitutional tax.

In the beginning, the trial court accepted the plaintiffs’ definition of two classes, as set out in the initial complaint: one class had already demanded a refund and one class had not. But the definition of the Class I membership did not circumscribe the limits of class counsel’s authority to act for the class. Rather, the definition of class membership defined the attributes of the class as it existed when the trial court certified it. Those class attributes were: lawyers who maintained a law office within the City and who paid the illegal occupation tax, but who had not filed requests for refunds pursuant to OCGA § 48-5-380 (c). The trial court properly declined to certify the Class I members for refunds because OCGA § 48-5-380 (c) requires taxpayers to file a refund demand, then wait a year before filing a lawsuit, and Class I members had not met the statutory requirements of filing a demand at that time. But the definition of Class I members — as lawyers who had not demanded a refund — did not foreclose class counsel from acting on behalf of the class and subsequently demanding a refund.

Ten days after the trial court held that the ordinance was unconstitutional, class counsel filed a demand for tax refunds with the “Council of the City of Atlanta Municipal Clerk.” In the demand, class counsel noted that:

Pursuant to Order of the Superior Court of Fulton County in the case of Barnes v. City of Atlanta, Civil Action No. 2000CV24809, we represent the class of persons consisting of all attorneys having an office in the City of Atlanta who have paid taxes and license fees in the form of a $400 annual occupational tax erroneously collected by the City of Atlanta for the years 1996,1997,1998,1999,2000,2001, and 2002 who have not made application for a refund of such taxes or license fees pursuant to OCGA § 48-5-380. On behalf of our clients we *397hereby file this claim for refund with the governing authority of the City in compliance with the provisions of that statute.

Attached to the demand was a list of names 579 pages long. The City does not dispute on appeal that it received this demand, for which class counsel tendered a receipt that the trial court admitted during the hearing on plaintiffs’ motion for entry of a partial money judgment.

In its order on the plaintiffs’ motion for entry of partial money judgment, the trial court found that the certification of Class I defined the class counsel’s scope of representation, holding that

Plaintiffs’ attorneys have essentially attempted to change the scope of their representation of the members of Class One through the refund request without an Order from the Court or any other approval which would permit them to represent the class for anything other than the constitutional claims. See Addley v. Beizer, 205 Ga. App. 714, 719 (423 SE2d 398) (1992) (“[A]n attorney is not a general agent for all purposes, but his authority is limited to the ‘particular purpose’ for which he was retained and his authority to do other things must be inquired into. . . .”). Such an amendment is certainly possible, but not after the merits of the case have been determined. Fed. Rule Civ. Proc. 23 (c) (1); Cox v. American Cast Iron Pipe Co., 784 F2d 1546 (11th Cir. 1986). In the instant case, the Plaintiffs filed their refund request but did not file anything with the Court seeking to amend the purposes for which the classes were certified. To attempt to do so at the hearing on final judgment is too late.
In the interest of judicial economy, however, and pursuant to a suggestion made by the City, Plaintiffs’ counsel may wish to consider filing a motion to amend the purposes for which Class One was certified and, of course, to publish an additional opt-out notice so that those members of Class One who do not want a refund... have the opportunity to opt-out.

The plaintiffs amended their complaint to seek refunds for the years 2001,2002, and 2003 in addition to the years claimed originally, then moved to alter and amend the class certification order to recertify Class I members for refund claims. The plaintiffs also moved to add additional party plaintiffs to represent those members of Class I on whose behalf class counsel demanded a refund. The trial court granted the motion to add additional named plaintiffs, and further granted plaintiffs’ motion to alter and amend the class certification. *398After noting that the City had continued to fight “tooth and nail” to continue collecting and keeping the occupation tax despite the “obviousness of the invalidity of the tax,” the court held:

Rather than conclude this litigation without a Final Judgment as to those members of Class One, the Court hereby rules that the “refund request” prerequisite to filing a lawsuit does not apply to the instant case in the interests of judicial economy, and also rules that the City has waived this argument by previously indicating its willingness in judicio to abide by this procedure. Class counsel has already filed refund requests on behalf of Class One, albeit without Court approval, and, in keeping with past practice, over a year has passed without the City taking action on the requests. The refund requests therefore are valid providing the members of Class One do not opt out of the class. ... For the Court to rule otherwise would establish a scenario wherein class counsel would be required to file a lawsuit to be approved as a class counsel for filing of refund purposes, together with all the notice requirements, and then to file another lawsuit to proceed on the claims.

The order concludes with directions to class counsel to serve notice on Class I members by certified mail and publication and establish an opt-out procedure. In a second order issued the same day, the trial court found that attorneys who filed for a refund sua sponte after the entry of the Class Certification Order but before the court’s order granting a money judgment to the Class II plaintiffs were still members of Class I.

Finally, the trial court issued an order clarifying that, because class counsel made the refund request on behalf of Class I members before authorized to do so, the statute of limitation began to run on the date of the court’s order on plaintiffs’ motion to alter and amend the class certification, February 27, 2004, and not on the date the refund request was made, March 12, 2002.

In Case No. A05A0873, the Class I plaintiffs appealed the trial court’s order on their motion to alter and amend the class certification and its ruling on the applicable statute of limitation. The City cross-appealed those orders in Case No. A05A0874.

The plaintiffs contend that the trial court erred in holding that class counsel did not have the authority to file a demand for refund on behalf of Class I members; in holding that the statute of limitation was not tolled by the filing of the lawsuit as to all class members; in holding that the statute of limitation began to run on February 24, *3992004; and in holding that class members who opt out of the class will not be responsible for attorney fees and costs.

1. The first three errors are related, because they all affect the date that determines the amount of each class member’s refund. OCGA§ 48-5-380 provides that taxpayers may seek a refundfor sums paid up to three years before they file their demand for a refund. In 1974, no action existed for the recovery of taxes paid voluntarily or under protest. Anderson v. Blackmon, 232 Ga. 4, 6 (2) (205 SE2d 250) (1974). Thus, “the legislature enacted § 48-5-380 to overcome the rule that a taxpayer could not recover a voluntary payment of taxes.” Nat. Health Network v. Fulton County, 270 Ga. 724, 726 (1) (514 SE2d 422) (1999). The statute specifies that if a taxpayer pays an erroneous or illegal fee, he “may file a claim for a refund with the governing authority of the county or municipality at any time within one year or, in the case of taxes, three years after the date of the payment of the tax or license fee to the county or municipality.” OCGA § 48-5-380 (b). In other words, the taxpayer is entitled to obtain a refund of erroneous or illegal taxes paid up to three years before his demand was filed.

In this case, the classes were defined by formula, not by a list of named individuals. Just because an individual class plaintiff begins as a member of one class and ends as a member of another class does not change the definition of the class. Class membership and class definition are not the same. The result of the trial court’s holding that class counsel did not have the authority to make a refund demand on behalf of Class I members would be that class counsel would have to solicit and obtain permission to act from each member before acting on that member’s behalf, rather than use his best judgment of which legal course to take. Such a holding would be an unusual restriction on a lawyer’s ability to practice law. The comment to Rule 1.2 of the Georgia Rules of Professional Conduct, which defines a lawyer’s scope of representation, states that a lawyer “should assume responsibility for technical and legal tactical issues,” only deferring to the client “regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected.” As a lawyer who represents an individual client would be authorized to file a demand for a tax refund on his client’s behalf, a lawyer who represents a class composed of such clients should also be authorized to do so. Moreover, this holding disregards the purpose for bringing the action: to obtain the tax refunds, and not merely to have the tax declared unconstitutional.

Further, class counsel was taking the very step that the City argued should have been taken, which was to file a demand with the City for the tax refund. The absence of such a demand was the very characteristic that separated Class I from Class II. Having to “certify” class counsel to seek a refund on behalf of Class I, when the class itself *400is already certified, is a procedure with no analogy to the practice of law in general, or even to the practice of law in class actions.

We should also keep in mind that “[t]he rationale for requiring exhaustion of administrative remedies is that resort to the administrative process will permit the agency to apply its expertise, protect the agency’s autonomy, allow a more efficient resolution, and result in the uniform application of matters within the agency’s jurisdiction.” Cerulean Cos. v. Tiller, 271 Ga. 65, 67 (1) (516 SE2d 522) (1999). In this case, the City never acted on anyone’s refund demand, either of the individuals comprising Class II or of class counsel on behalf of Class I. While I agree with the majority that this lawsuit is governed by the procedures set forth in OCGA § 48-5-380, and not by the common-law claim for money had and received, we need not interpret that statute so rigidly that we foreclose two years of class members’ refunds.

2. I would also reverse the trial court’s holding that Class II members who opt out of the class are not liable for attorney fees or costs.

Under standard “American rule” practice, each litigant pays his or her own attorneys’ fees. Yet, there are times when the rule must give way. For example, when a court consolidates a large number of cases, stony adherence to the American rule invites a serious free-rider problem. If a court hews woodenly to the American rule under such circumstances, each attorney, rather than toiling for the common good and bearing the cost alone, will have an incentive to rely on others to do the needed work, letting those others bear all the costs of attaining the parties’ congruent goals.

(Citations omitted.) In re: Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litigation, 982 F2d 603, 606 (1st Cir. 1992) (mass disaster litigation).

In this case, allowing class members to opt out without paying any portion of the attorney fees creates a “free rider” problem, and is

inconsistent with the fundamental premise that a class member who opts-out cannot participate in the benefits of the case and is not bound by the judgment in the case. See Sarasota Oil Co. v. Greyhound Leasing & Financing Corp., 483 F2d 450, 452 (10th Cir. 1973), in which the Court pointed out that “those who elect to be excluded cannot participate in the benefits of a successful class action. . . .”
*401Decided September 6, 2005 Winburn, Lewis & Stolz, Irwin W. Stolz, Jr., Decker, Hallman, Barber & Briggs, Robert D. Feagin, for appellants. Lemuel H. Ward, Linda K. DiSantis, for appellee.

Muldrow v. H. K. Porter Co., 20 Fed. R. Serv. 2d 1069 (5) (c) (N.D. Ala. 1975) (denying plaintiffs motion for “partial opt-out”).

For these reasons, I respectfully dissent to all of the divisions of the majority opinion except Division 1 (a) and that portion of Division 1 (c) holding that the running of the statute of limitation was not tolled by filing the complaint.