McLane Co. v. Davis

33 S.W.3d 473, 342 Ark. 655
CourtSupreme Court of Arkansas
DecidedNovember 16, 2000
Docket00-417
StatusPublished
Cited by5 cases

This text of 33 S.W.3d 473 (McLane Co. v. Davis) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McLane Co. v. Davis, 33 S.W.3d 473, 342 Ark. 655 (Ark. 2000).

Opinion

Tom Glaze, Justice.

This is the second appeal by appellant McLane Company, Inc., regarding the application of Arkansas’s Unfair Cigarette Sales Act, Ark. Code Ann. § 4-75-701 et seq., (R.epl. 1999) (“the Act”). McLane Company is a wholly owned subsidiary of Wal-Mart Stores, Inc., and a wholesaler of cigarettes and other products. In McLane, Inc. v. Weiss, 332 Ark. 284, 965 S.W.2d 109 (1998) (McLane I), we upheld the Act’s constitutionality, and held it reasonably protects wholesalers and retailers from unfair competition and predatory pricing.

Prior to 1981, the Department of Finance and Administration (“DFA”) limited cigarette wholesalers to a minimum sales price for cigarettes that was calculated as the cost of cigarettes to the seller plus two percent. In 1981, DFA raised that presumptive mark-up to four percent. This “cost of doing business” could not be, lowered unless the wholesaler presented proof of a lesser or higher cost of doing business to DFA. In 1988, DFA promulgated Miscellaneous Tax Regulation 1988-2, which formally established the 4% markup and which allowed a wholesaler who desired to sell cigarettes for less than the “cost plus 4%” limit to request permission to do so in writing and offer information that supported the wholesaler’s claimed lower cost of doing business.

On October 19, 1995, McLane requested that DFA repeal Regulation 1988-2 and the regulation’s four-percent requirement. McLane submitted to DFA a detailed and lengthy cost analysis and report, reflecting a lesser cost of doing business than that presumed by either the Act or Regulation 1988-2. After reviewing McLane’s proof, DFA promulgated Miscellaneous Tax Regulation 1995-5, which established that a wholesaler’s cost of doing business is one-half of one percent of the basic cost of cigarettes. On October 25, 1995, the Director of DFA notified McLane in writing that, on November 6, 1995, McLane could commence to sell cigarettes at the new minimum price. The new regulation went out in the form of a directive to all wholesale cigarette distributors on October 25, 1995.

Claiming that McLane’s “proof’ violated the Act, a group of McLane’s competitors filed suit on November 1, 1995, in Chicot County Chancery Court. The competitors obtained a preliminary injunction preventing DFA from implementing Regulation 1995-5 until such time as it had developed administrative rules and procedures to review statutorily-mandated proof such as cost surveys or audits to establish a lower cost of doing business, and established exactly what “proof’ it would accept as part of the review procedure. On November 21, 1995, after the preliminary injunction had been entered, DFA moved to dismiss the suit in chancery court, asserting McLane had not been joined as a necessary party despite the fact that the injunction directly named McLane.

Instead, McLane subsequently filed suit against DFA in November of 1995 in Pulaski County Chancery Court, alleging that the Act and Regulation 1988-2 were unconstitutional. McLane’s competitors intervened, and the chancery court later upheld the constitutionality of the Act, a decision which we affirmed in McLane I.

Almost four years later, on July 15, 1999, McLane sought to intervene in the earlier November 1, 1995, ongoing suit in Chicot County, where it claimed a recognized interest in that litigation and asserted that its interests were not being fairly represented. McLane suggested its intervention was timely, since no developments or discovery had occurred since the injunction was entered in November of 1995. On December 29, 1999, the trial court denied McLane s motion to intervene as untimely.1 McLane now appeals the trial courts denial of its motion on January 13, 2000, arguing that it had a right to intervene in the Chicot County Chancery Court action pursuant to Ark. R. Civ. P. 24(a), and that its intervention was timely because no significant discovery or developments had occurred in that lawsuit since November of 1995.

Rule 24(a) provides as follows:

Upon timely application anyone shall be permitted to intervene in an action: ... (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.

On appeal, McLane argues that it has an economic interest in the outcome of the suit pending in Chicot County, and that its interest will be impaired by the disposition of that suit if it is unable to intervene. Even if this were true, however, Rule 24(a) does not give an absolute right to intervene unless the application is timely. Bank of Quitman v. Phillips, 270 Ark. 53, 603 S.W.2d 450 (Ark. App. 1980). Here, McLane’s application was untimely. Indeed, this court has noted that “the first three words of Rule 24(a) ... are ‘upon timely application . . . .’ A decision as to the timeliness of intervention is a matter within the sound discretion of the trial court and is subject to reversal only where that discretion has been abused.” Employers Nat’l Ins. Co. v. Grantors, 313 Ark. 645, 647, 855 S.W.2d 937 (1993) (emphasis added). In exercising its sound discretion, the trial court must first be satisfied as to timeliness. Cupples Farms Partnership v. Forrest City Prod. Credit Ass’n, 310 Ark. 597, 839 S.W.2d 187 (1992) (citing NAACP v. New York, 413 U.S. 345 (1973)).

Timeliness is to be determined from all the circumstances, Carton v. Missouri Pacific R.R., 315 Ark. 5, 865 S.W.2d 635 (1993), and those factors to consider in a decision on timeliness are as follows: 1) how far have the proceedings progressed; 2) has there been any prejudice to other parties caused by the delay; and 3) what was the reason for the delay. Delay in asserting a right is obviously a critical factor. Cupples Farms, 310 Ark. at 603 (motion filed after seven to ten years untimely, when parties had been aware of rights for all that time); Lowell v. Lowell, 55 Ark. App. 211, 934 S.W.2d 540 (1996) (motion filed three months after final order entered found to be timely).

As already stated, the Chicot County Chancellor specifically denied McLane’s motion to intervene on the grounds that it was untimely, because its intervention was sought nearly four years after the November 1995 preliminary injunction had been entered. In these circumstances, our threshold inquiry is whether or not the denial of the motion was an abuse of the chancellor’s discretion. Because we agree that McLane’s motion was untimely, it is unnecessary to consider whether McLane had a sufficient interest to protect by its intervention.

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