concurring in part and dissenting in part. While I concur in the majority’s decision to deny the motion to dismiss and in the decision to uphold the award of the attorneys’ fees, I dissent from the majority’s decision to award attorneys’ fees based on the claimed amount rather than the total amount of the settlement refunds. The statute awarding attorneys’ fees in illegal-exaction suits is codified at Ark. Code Ann. § 26-35-902 as follows:
Award of attorneys’ fees — Disposition of residual funds.
(a) It is the public policy of this state that circuit and chancery courts may, in meritorious litigation brought under Arkansas Constitution, Article 16, § 13, in which the court orders any county, city, or town to refund or return to taxpayers moneys illegally exacted by the county, city, or town, apportion a reasonable part of the recovery of the class members to attorneys of record and order the return, or refund of the balance to the members of the class represented.
(b) If, after expiration of a reasonable period of time for the filing of claims for the illegally exacted moneys as ordered by the court, residual funds exist, said residual funds shall be deemed abandoned and escheat to the county, city, or town which exacted same.
Ark. Code Ann. § 26-35-902 (Repl. 1997).
The first rule of statutory construction is to give words their ordinary and usually accepted meaning. Yamaha Motor Corp. v. Richard’s Honda Yamaha, 344 Ark. 44, 38 S.W.3d 356 (2001); Arkansas Vinegar Co. v. Ashby, 294 Ark. 412, 743 S.W.2d 798 (1988). In this case, the issue turns on the word “recovery” in subsection (a) of section 26-35-902. If “recovery” means only the claimed amount, the majority is correct in its analysis; but if “recovery” means the total amount of illegally-exacted funds, then the trial court made no error in awarding a percentage of the total settlement fund. I believe the latter statement is the correct interpretation.
In examining the statute, it is apparent that a total fund is contemplated and an orderly progression results. First, attorneys fees are deducted, then the balance is returned or refunded to taxpayers, and, finally, any portion not claimed by the taxpayers then escheats back to the taxing authority that illegally-exacted the funds in the first place. To give “recovery” the majority’s interpretation would be to wait for claims to be made and then award a percentage of those claims to the attorneys, but the statute speaks of paying the claims after the attorneys’ fees are apportioned, not before.
The issue of the term “recovery” has not presented itself in any previous decision by this court in an illegal-exaction case. However, in surveying our illegal-exaction decisions, those cases that do mention an attorneys’ fee show that the fee percentage was based on the entire pool of illegally-exacted funds, and not merely the claimed amount. In particular, the case of Powell v. Henry, 267 Ark. 484, 592 S.W.2d 107 (1980), on which the majority relies for its analysis of the attorneys’ fee issue, awarded an attorneys’ fee of 15% of the total fund, and that amount was affirmed by this court. As pointed out by the majority, Powell involved an illegal exaction of $639,226.24 and attorneys’ fees of $95,884.31. There was never any question in the Powell decision that the attorneys’ fees award would be based on any amount other than the total fond.
An illegal-exaction suit that was decided in 1983 shows that the trial court in that case also used the total fund as the basis for its award of an attorney’s fee. See City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229 (1983). In Cash, the total fund was $1,264,761.30 and the attorney’s fee was $316,190, which is 25% of the total. While the attorney’s fee was later reversed, it was reversed on the basis of the class attorney’s conflict of interest in having previously represented the defendant as its city attorney at the time the illegally-exacted funds were collected. There was never any challenge to the trial court’s calculation of 25% of the total fund.
As stated in many previous decisions of this court, an illegal-exaction suit is a constitutionally-created class action. The United States Supreme Court has stated unequivocally that the basis for an attorney’s fee in a class action is the total fund, not the claimed amount of money actually refunded to the class. See Boeing v. Van Gemert, 444 U.S. 472 (1980). In Boeing, the Court stated that it had “recognized consistently that a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Id. at 478 (citing several U.S. Supreme Court decisions for this proposition).
In Boeing, the settlement provided that any unclaimed amounts of the total fund would revert back to Boeing, the defendant, much the same as the settlement in the instant case, in which unclaimed funds will escheat to the taxing authorities that originally collected the funds. Boeing had appealed the district court’s ruling on attorney’s fees because it wanted only the claimed amount of the fund to pay the fees, thus leaving untouched the unclaimed portion that would revert after all claims had been filed. Id. The Court, in upholding the district court’s ruling, stated that whether or not the members of the class asserted their right to their respective shares, they were still responsible for their respective part of the attorney’s fee:
Although Boeing itself cannot be obliged to pay fees awarded to the class lawyers, its latent claim against unclaimed money in the judgment fund may not defeat each class member’s equitable obligation to share the expenses of litigation.
Id. at 481.
The Court found that when a plaintiff has simply vindicated a “general social grievance,” there should be no shifting of attorneys’ fees, and the attorney is merely entitled to the fee under the contract with the attorney’s named client. Id. at 479. However, the Court held that there were certain criteria that, if met, would entide an attorney to a fee from the entire fund:
On the other hand, the criteria are satisfied when each member of a certified class has an undisputed and mathematically ascertainable claim to part of a lump-sum judgment recoverable on his behalf. Once the class representatives have established the defendant’s liability and the total amount of damages, members of the class can obtain their share of the recovery simply by proving their individual claims against the judgment fund. This benefit devolves with certainty upon the identifiable persons whom the court has certified as members of the class. Although the full value of the benefit to each absentee member cannot be determined until he presents his claim, a fee awarded against the entire judgment fund will shift the costs of litigation to each absentee in the exact proportion that the value of his claim bears to the total recovery.
Id. at 479 (citing generally, Dawson, Lawyers and Involuntary Clients in Public Interest Litigation, 88 Harv. L. Rev. 849, 916-922 (1975)).
In the instant case, there is no reason to deviate from the U.S. Supreme Court’s reasoning even though this is a constitutionally-created class rather than a typical Rule 23 class action. The class members in this illegal-exaction case also have an undisputed and mathematically-ascertainable claim to part of the total judgment, and can also obtain their share simply by proof of their individual claims against the fund. The Boeing decision explained the reasoning behind this “total fund” rule as follows:
Unless absentees contribute to the payment of attorney’s fees incurred on their behalves, they will pay nothing for the creation of the fund and their representatives may bear additional costs. The judgment entered by the District Court and affirmed by the Court of Appeals [which allowed for an attorney’s fee from the entire fund] rectifies this inequity by requiring every member of the class to share attorney’s fees to the same extent that he can share in the recovery.
Id. at 480.1
In an Arkansas illegal-exaction case, this same reasoning holds true. We have here a class made up of individuals who have a benefit as shown by their mathematically ascertainable share, and whether or not they assert their right to that share of the fund, they should still be responsible for the costs of the litigation that gave them this benefit. The majority rightly points out in its opinion that “[although not every class member claimed his refund, class counsel did obtain a refund for each member.” The majority agrees that the amount of the refund is clearly definable, and “a positive result was obtained in that had the litigation not occurred, each government entity could have continued collecting the illegally exacted funds.” An award of attorneys’ fees from the total fund is thus the correct measure of the class members’ responsibility for their share of the litigation expenses, and if they then choose to let the balance of their share escheat to the districts, that is their prerogative.
Furthermore, there would be no need for the unclaimed funds to “escheat” to the taxing authority by the terms of the statute if they were not part of the recovery. If the recovery includes only the claimed funds, as maintained by the majority, then the unclaimed funds would belong to the taxing authority by right, not by escheat. Because I believe the “recovery” spoken of in the statute must refer to the entire gross amount of the illegally-exacted funds, I must respectfully dissent.
Corbin, J., joins in this dissent.Contrary to the majority’s assertion that “at least one other state has held as we do in the instant case,” the case cited for that proposition, Goodrich v. E.F. Hutton, 681 A.2d 1039 (Del. 1996), did not hold that claimed amounts were the only measure of a recovery. Instead, the Delaware Supreme Court, using its standard of review to reverse only where there is an abuse of discretion, merely affirmed a trial court’s award of attorneys’ fees based on the claimed amount of a recovery as being within the trial court’s discretion. Id. at 1049. In doing so, however, the court noted that the attorneys’ fee amount was deducted from the total $3.3 million common fund. Id. at FN 11. Further, the court increased its award percentage from 16% of the common fund to 33% of the claimed amount, up to a maximum of $515,000 (which was 16% of the common fund). In other words, the amount of attorneys’ fees — $515,000 — stayed the same. In the instant case, the majority is reversing a trial court, although our standard of review is also abuse of discretion, by stating that the trial court abused its discretion by awarding attorneys fees as they have always been awarded in this state — on the basis of the total fund. Additionally, the majority has not increased the percentage from 25% of the total fund to whatever percentage of the claimed amount would be necessary to obtain the same fee, as was done by the Delaware chancery court. The cited case is inapposite to the instant case.