NEW CINGULAR WIRELESS PCS, LLC v. DEPARTMENT OF REVENUE

843 S.E.2d 431, 308 Ga. 729

• Court: Supreme Court of Georgia
• Decided: May 18, 2020
• Docket: S19G0802
• Status: Published

Opinion

308 Ga. 729 FINAL COPY

S19G0802. NEW CINGULAR WIRELESS PCS, LLC et al. v. DEPARTMENT OF REVENUE et al.

BOGGS, Justice.

After nearly ten years of litigation, this Court granted a second

petition for certiorari in this dispute over the refund of millions of

dollars in Georgia sales and use taxes that allegedly violated a

federal statute. In 2010, New Cingular Wireless PCS, LLC, and

three other AT&T Mobility subsidiaries (collectively, “AT&T”) filed

refund claims with the Georgia Department of Revenue seeking the

return of the sales and use taxes that AT&T had collected from its

customers and turned over to the Department. In 2015, the

Department denied the claims, and AT&T filed a complaint in

DeKalb County Superior Court to compel the refunds.

In 2016, the trial court dismissed the complaint on three

grounds: (1) a Georgia regulation required “dealers” like AT&T to

return the sums collected from their customers before applying to the Department for a refund of the illegal taxes; (2) AT&T lacked

standing to seek refunds of taxes for periods prior to May 5, 2009,

the effective date of the General Assembly’s amendment to the

refund statutes to allow dealers to seek refunds on behalf of their

customers, see Ga. L. 2009, p. 816, §§ 3, 4; and (3) AT&T’s claims

amounted to a class action barred by the refund statutes.

In 2017, the Court of Appeals affirmed the trial court’s

dismissal order on the first ground. See New Cingular Wireless PCS,

LLC v. Ga. Dept. of Revenue, 340 Ga. App. 316 (797 SE2d 190) (2017)

(“New Cingular I”). We granted certiorari and reversed that ruling,

holding that the regulation, as properly construed, did not require

dealers to return the sums collected before applying for a refund. See

New Cingular Wireless PCS, LLC v. Ga. Dept. of Revenue, 303 Ga.

468, 471-474 (2) (813 SE2d 388) (2018) (“New Cingular II”). We also

vacated the Court of Appeals’ judgment in part and remanded the

case to the Court of Appeals with the direction to consider the second

and third grounds for the trial court’s dismissal order. See id. at 470

(1), 474 (3). On remand, the Court of Appeals upheld the trial court’s ruling

that AT&T lacked standing to seek refunds for periods prior to the

effective date of the 2009 amendments to the refund statutes

allowing dealers to seek refunds on behalf of their customers. See

New Cingular Wireless PCS, LLC v. Ga. Dept. of Revenue, 348 Ga.

App. 516, 520 (1) (823 SE2d 833) (2019) (“New Cingular III”). See

also OCGA §§ 48-2-35, 48-2-35.1 (d).1 We granted AT&T’s petition

for certiorari, posing the following question: “Did the Court of

Appeals err in holding that the plaintiffs lacked standing to file

refund claims for periods prior to May 5, 2009?” For the reasons

discussed below, we conclude that the Court of Appeals did err. We

therefore reverse in part and we again remand this case to the Court

of Appeals.

As amended in 2009, OCGA § 48-2-35 (a) provides in relevant

part:

A taxpayer shall be refunded any and all taxes or

1 The Court of Appeals also reversed the trial court’s ruling that AT&T’s

claims were barred as a class action. See New Cingular III, 348 Ga. App. at 521-522 (2). The Department did not file a petition for certiorari seeking review of that holding, which is not at issue here. fees which are determined to have been erroneously or illegally assessed and collected from such taxpayer under the laws of this state, whether paid voluntarily or involuntarily, and shall be refunded interest, except as provided in subsection (b) of this Code section[.]

Subsection (f) of the same Code section provides: “For purposes of all

claims for refund of sales and use taxes erroneously or illegally

assessed and collected, the term ‘taxpayer,’ as defined under Code

Section 48-2-35.1, shall apply.” Subsection (d) of OCGA § 48-2-35.1

provides:

Except as provided for in this subsection, for the purposes of all claims for refund of sales and use taxes erroneously or illegally assessed and collected, the term “taxpayer” as used in Code Section 48-2-35 shall mean a dealer as defined in Code Section 48-8-2 that collected and remitted erroneous or illegal sales and use taxes to the commissioner.2

In New Cingular III, the Court of Appeals correctly stated the

general principle that “laws prescribe for the future” and “ordinarily

cannot have a retrospective operation.” (Citations, punctuation and

footnotes omitted.) 348 Ga. App. at 519 (1). The Court of Appeals

2 OCGA § 48-2-35.1 (d) goes on to prescribe the procedure for “[a] person

that has erroneously or illegally paid sales taxes to a dealer” to file a claim for refund directly. also correctly recognized that “legislation which involves mere

procedural or evidentiary changes may operate retrospectively;

however, legislation which affects substantive rights may only

operate prospectively,” and that “a substantive law creates rights,

duties, and obligations while a procedural law prescribes the

methods of enforcing those rights, duties, and obligations.”

(Citations, punctuation and footnotes omitted.) Id. at 520 (1). And

the Court of Appeals correctly stated that “a statute does not operate

retrospectively in its legal sense simply because it relates to

antecedent facts.” (Citation and punctuation omitted.) Id. at 519 (1).

However, in applying these principles to the facts here, the

Court of Appeals reasoned that, because standing is the question of

“whether the litigant is entitled to have the court decide the merits

of the dispute or of particular issues,” standing therefore is “an

entitlement, or a substantive right,” and that the 2009 amendments

to the refund statutes thus created a substantive right and may not

be applied retrospectively. (Citations, punctuation and footnotes

omitted; emphasis in original.) New Cingular III, 348 Ga. App. at 520 (1). This ultimate conclusion was erroneous.

Where the Court of Appeals went astray was in declaring that

a statute broadening standing always and necessarily creates “a

substantive right,” so that such a statute “may only operate

prospectively.” (Citations, punctuation and footnote omitted.) New

Cingular III, 348 Ga. App. at 520 (1). It is true that, in order to

maintain an action, a party “must establish standing to sue on the

ground asserted, which requires showing an injury in fact that was

caused by the breach of a duty owed by the defendants to the

plaintiffs and that will be redressed by a favorable decision from the

court.” Ames v. JP Morgan Chase Bank, 298 Ga. 732, 738 (3) (b) (783

SE2d 614) (2016). See also Granite State Outdoor Advertising v. City

of Roswell, 283 Ga. 417, 418-419 (1) (658 SE2d 587) (2008). But it

does not follow that standing to sue is necessarily a substantive

right. For example, standing may be granted at common law or by

statute for the special purpose of representing others in the

assertion of their claims. This is generally termed “representational

standing.” As the United States Supreme Court has observed, the entire doctrine of “representational standing,” of which the notion of “associational standing” is only one strand, rests on the premise that in certain circumstances, particular relationships (recognized either by common-law tradition or by statute) are sufficient to rebut the background presumption (in the statutory context, about [the legislature’s] intent) that litigants may not assert the rights of absent third parties.

(Citations and footnotes omitted.) United Food & Commercial

Workers Union Local 751 v. Brown Group, 517 U. S. 544, 557 (III)

(C) (116 SCt 1529, 134 LE2d 758) (1996) (noting common-law

concept of the next friend as well as federal statutory provisions for

representational standing).

OCGA § 9-11-17 (a) summarizes the instances under which a

representative may bring an action in Georgia for the benefit of

another:

An executor, an administrator, a guardian, a bailee, a trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may bring an action in his own name without joining with him the party for whose benefit the action is brought; and, when a statute so provides, an action for the use or benefit of another shall be brought in the name of the state.

Perhaps the most familiar instance of representational standing is found in OCGA § 9-11-17 (c):

Whenever an infant or incompetent person has a representative, such as a general guardian, committee, conservator, or other like fiduciary, the representative may bring or defend an action on behalf of the infant or incompetent person. If an infant or incompetent person does not have a duly appointed representative, he may bring an action by his next friend or by a guardian ad litem.

Other statutory provisions permit certain State agencies and

officials to assert legal claims on behalf of individuals. For example,

the Department of Human Resources has standing under OCGA §

19-11-12 (d) (4) (B) to petition the superior court for child support

modification, even when the State has no direct interest because the

child is not receiving public assistance. See Falkenberry v. Taylor,

278 Ga. 842, 843 (607 SE2d 567) (2005). Similarly, the Attorney

General or a district attorney has standing under OCGA § 53-12-174

to enforce the terms of a charitable trust in the interest of the

beneficiaries. See Cronic v. Baker, 284 Ga. 452, 453-454 (1) (667

SE2d 363) (2008) (decided under former OCGA § 53-12-115). In none

of these situations does a statute or common law grant to a representative a right to recover for itself, as opposed to for and on

behalf of the real party in interest.3

Similarly here, contrary to the Court of Appeals’ assertion in

New Cingular III, the “dealer” acquires no substantive “right” to a

refund under OCGA § 48-2-35.1. Subsection (d) of that statute

specifically defines as a “taxpayer” “a dealer as defined in Code

Section 48-8-2 that collected and remitted erroneous or illegal sales

and use taxes to the commissioner.” (Emphasis supplied.) The

additional provisions of the statute make clear that a refund claim

may be filed by either the dealer or a “customer,” defined as “[a]

3 As we observed in Aldridge v. Ga. Hospitality & Travel Assn., 251 Ga.

234 (304 SE2d 708) (1983), the concepts of real party in interest, capacity, and standing are related, but different. Id. at 235 (1) (citing 6A Charles A. Wright et al., Fed. Prac. & Proc. Civ. § 1542 (1971) (hereinafter Wright & Miller)). Moreover, it should be noted that the question of who is the real party in interest should be distinguished from the question of in whose name an action may be brought. State law may provide that a particular plaintiff has a cause of action but that the claim should be prosecuted in the name of another party. In that situation the federal court will allow the claim to be asserted by plaintiff who has a substantive right under state law, which makes plaintiff the real party in interest for purposes of Rule 17 (a). In short, the question of in whose name the action should be brought is a procedural one. . . . Wright & Miller § 1544 (3d ed. rev. 2020). person that has erroneously or illegally paid sales taxes to a dealer

that collected and remitted such taxes to the commissioner.” OCGA

§ 48-2-35.1 (d). The customer may seek a refund either from the

Department or from the dealer, subject to the procedures in

paragraphs (d) (1) and (d) (2) designed to prevent a double recovery.

A dealer, on the other hand, “must affirmatively show that the tax

so illegally or erroneously collected was paid by him and not paid by

the consumer, or that such tax was collected from the consumer as

tax and has since been refunded to the consumer.” Ga. Comp. R. &

Regs. r. 560-12-1-.25 (2).

Therefore, as we previously explained in New Cingular II, 303

Ga. at 471-472 (2), the statutory and regulatory scheme itself

demonstrates that the dealer as representative acquires no right to

a tax refund. The dealer makes no claim for itself but only on behalf

of the real party in interest, just as a guardian ad litem or next

friend acquires no “right” in the underlying claim of the minor or

incapacitated person. See, e.g., Fuller v. Dillon, 220 Ga. 36, 43 (3)

(136 SE2d 733) (1964) (noting that next friend of ward “has no direct pecuniary interest that would authorize her to sue in her individual

capacity”).

The Department relies upon Sawnee Elec. Membership Corp.

v. Ga. Dept. of Revenue, 279 Ga. 22 (608 SE2d 611) (2005), in which

an electrical membership corporation (“the EMC”) was barred from

seeking a sales tax refund on behalf of its members under former

OCGA § 48-2-35. The Department contends that Sawnee shows that

dealers lacked standing to file claims for refunds prior to the

amendment of OCGA §§ 48-2-35 and 48-2-35.1, and that the

amendments therefore created a new, substantive right in dealers

to seek a refund, thus barring retrospective application. But while

Sawnee did involve a claim for the refund of sales taxes, it is

distinguishable here. The EMC claimed “associational standing” on

the basis of its members’ interest. That basis for standing, while

constituting a subset or “strand” of representational standing, see

United Food, 517 U. S. at 557 (III) (C), is significantly limited in its

scope. See generally Aldridge v. Ga. Hospitality & Travel Assn., 251

Ga. 234, 235 (304 SE2d 708) (1983) (adopting three-part test for associational standing set forth in Hunt v. Washington State Apple

Advertising Comm., 432 U. S. 333, 341 (97 SCt 2434, 53 LE2d 383)

(1977)).

In Sawnee, we concluded that the EMC was not a “taxpayer”

within the meaning of former OCGA § 48-2-35, and that sovereign

immunity prohibited it, as a non-taxpayer, from asserting

associational standing in a tax refund case under the Code section

then in effect. 279 Ga. at 25 (3). Here, in contrast, AT&T is claiming

representational standing under the amended OCGA §§ 48-2-35 and

48-2-35.1 (d), which expressly grant it standing as a “taxpayer.”4

In sum, the representational standing granted to AT&T by the

amended statute is not a substantive change in the law. It creates

no new obligations and grants no substantive rights that did not

4 While the Department asserts that sovereign immunity bars AT&T’s

pre-amendment claims, the revised statute expressly defines dealers as taxpayers for purposes of OCGA § 48-2-35, and, as we observed in New Cingular II, “there is agreement that OCGA § 48-2-35 does waive the State's sovereign immunity to allow tax refunds. See Sawnee Elec. Membership Corp. v. Ga. Dept. of Revenue, 279 Ga. 22 (2) (608 SE2d 611) (2005). The only question is the extent of that waiver.” New Cingular II, 303 Ga. at 470 (1) n.3. And, as we noted in Sawnee, the waiver addresses the tax refund claim, not the party authorized to seek it. 279 Ga. at 23 (2). exist before. The Department is still obligated to return the

wrongfully imposed sales tax to the customer, whether directly or by

way of a dealer. See OCGA § 48-2-35 (a). The amended statute does

not change the right of customers to recover the wrongfully imposed

sales taxes that dealers collected on behalf of the Department, and

it gives no right to the dealer to obtain any refund for itself. Rather,

it merely sets out a procedure to facilitate the recovery of sales taxes,

which are not a large amount for any single customer, but in the

aggregate constitute a substantial sum.5 The revised statute is

therefore not substantive but procedural. See, e.g., Mason v. Home

Depot U.S.A, 283 Ga. 271, 278 (4) (658 SE2d 603) (2008) (amended

statute governing expert witnesses procedural in nature).

Because the statute is procedural and does not alter or create

any rights or obligations, the amendment properly may be applied

retrospectively. See Mason, 283 Ga. at 278 (4). See also Polito v.

Holland, 258 Ga. 54, 55 (2) (365 SE2d 273) (1988) (“[W]here a

5 As we noted in New Cingular II, AT&T’s initial request for a refund

amounted to nearly $6 million. See 303 Ga. at 468 n.1. statute governs only procedure of the courts, including the rules of

evidence, it is to be given retroactive effect absent an expressed

contrary intention.”). Thus, AT&T has statutorily granted

representational standing to recover wrongfully paid sums on behalf

of and for the benefit of its customers. To the extent, therefore, that

the Court of Appeals held that AT&T lacked standing to file a claim

on behalf of its customers for any taxes for periods before May 5,

2009, the Court of Appeals’ judgment is erroneous and must be

reversed.6 Accordingly, we reverse in part the Court of Appeals’

judgment, and we remand this case to the Court of Appeals.

Judgment reversed in part and case remanded. All the Justices concur, except Peterson and Bethel, JJ., disqualified, and Warren, J., not participating.

DECIDED MAY 18, 2020. Certiorari to the Court of Appeals of Georgia — 348 Ga. App. 516. Bryan A. Vroon; Margaret C. Wilson, for appellants. Christopher M. Carr, Attorney General, W. Wright Banks, Jr., Deputy Attorney General, Alex F. Sponseller, Senior Assistant Attorney General, John S. Forbes, Assistant Attorney General, for appellees.

6 We note that, as AT&T concedes, such claims will be subject to the

three-year statute of limitation provided by OCGA § 48-2-35 (c).