A. REMY FRANSEN, JR. AND ALLAIN F. HARDIN
THE CITY OF NEW ORLEANS, ET AL
FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2002-05170,
DIVISION "N-8" Honorable Ethel Simms Julien, Judge.
F. Hardin A. Remy Fransen, Jr. FRANSEN & HARDIN, P.L.C.
COUNSEL FOR PLAINTIFFS/APPELLEES
A. Brown Shannon S. Holtzman LISKOW & LEWIS, APLC
Lawrence Blake Jones BLAKE JONES LAW FIRM Errol Conley LAW
OFFICE OF ERROL B. CONLEY COUNSEL FOR DEFENDANTS/APPellants
composed of Judge Daniel L. Dysart, Judge Rosemary Ledet,
Judge Regina Bartholomew-Woods
Linebarger, Goggan, Blair & Sampson, LLP
("Linebarger"), United Governmental Services of
Louisiana, Inc. ("UGSL"), and the City of New
Orleans ("the City"), and Plaintiffs, A. Remy
Fransen, Jr., and Allain F. Hardin, appeal the November 24,
2015 judgment of the trial court granting class
certification. For the reasons that follow, we amend the
judgment in part, and as amended, affirm.
AND PROCEDURAL BACKGROUND
matter has been before this Court previously on a number of
occasions. Plaintiffs filed their original petition in 2002,
challenging City Ordinance No. 18637 ("the Ordinance"),
which the New Orleans City Council passed on March 5, 1998.
The Ordinance was enacted to provide for the collection of
delinquent ad valorem taxes. In order to
"encourage prompt compliance by the taxpayers"
affected by the Ordinance, the Ordinance imposed a penalty of
three percent of the amount of the tax due on the day the tax
became delinquent, with interest accruing at a rate of one
percent per month that the tax and penalty went unpaid. For
all delinquent taxes for prior years not paid by April 1st of
the following year, the Ordinance imposed an additional
penalty of thirty percent "to defray costs of
collection" if the City "referred the collection of
the delinquent taxes, penalty and interest to an attorney or
Louisiana Supreme Court, in Fransen v. City of New
Orleans, 2008-0076, 2008-0087, pp. 4-7 (La. 7/1/08), 988
So.2d 225, 230-32, set forth the relevant background to the
matter now before this Court as follows: the City contracted
with the law firm of Heard, Linebarger, Graham, Goggan,
Blair, Pena & Sampson, L.L.P. and UGSL for tax collection
services under the Ordinance. A. Remy Fransen, Jr., and
Allain F. Hardin filed suit against the City and law firm
alleging that the Ordinance was unconstitutional, later
adding UGSL as an additional defendant. The parties filed
motions for summary judgment regarding the constitutionality
of the Ordinance. The district court granted defendants'
motion for summary judgment, finding the Louisiana
Constitution did not limit the City's options in
collecting delinquent ad valorem taxes. On appeal,
this Court reversed. Fransen v. City of New Orleans,
2006-1325 (La.App. 4 Cir. 10/3/07), 970 So.2d 1. Defendants
applied for supervisory writs to the Louisiana Supreme Court,
which granted writs, Fransen v. City of New Orleans,
2008-0076, 2008-0087 (La. 2/22/08), 976 So.2d 1275, and
ultimately declared the scheme unconstitutional:
[W]e find Ordinance No. 18637, codified in the New Orleans
Code of Ordinances, Chapter 150, Article II, §§
150-46.1 through 150-46.6 unconstitutional with respect to
any provisions that permit the City to place delinquent ad
valorem property taxes on immovables for collection with an
attorney or agent and/or that permit the City to proceed in
any manner other than by the constitutionally mandated manner
of tax sales to collect delinquent ad valorem property taxes
on immovables. Article VII, § 25(A) of the Louisiana
Constitution prohibits methods or proceedings other than tax
sales to collect delinquent ad valorem property taxes. We
further find the Ordinance, as codified, unconstitutional to
the extent it imposes penalties, other than interest, upon
delinquent ad valorem property taxes on immovables. The
constitutional provision relating to property taxation
permits the governmental subdivision to impose only
the taxes, interest and costs in proceeding to sell the
property for the delinquent ad valorem taxes.
Fransen, 2008-0076, 2008-0087 at pp. 24-25, 988
So.2d at 242.
several more years of litigation, the district court
conducted a class certification hearing over three days, May
26 through 28, 2015. Plaintiffs sought to certify a class
consisting of individuals who paid the unconstitutional fees
and penalties between March 6, 1998, and May 6, 2006.
relied largely on a spreadsheet produced by Walter
O'Brien, Finance Operations Manager for the City. Mr.
O'Brien testified that he works in the City's
treasury department on property tax issues. The spreadsheet
covered tax data from May 1, 1998, to April 30, 2005. Mr.
O'Brien testified that the spreadsheet contained multiple
pieces of data, to wit: the type of tax assessed, the bill
number associated with the tax, the tax year, the existence
of liens on a particular property, the date payments were
received, the amount of ad valorem tax paid, the
amount of the City penalty paid, the amount of collection
agency charges, the name of the assessed owner, and the
address. In total, the spreadsheet contained 249, 913
O'Brien explained that the payments reflected on the
spreadsheet could be broken down into taxes, interest, and
penalties. However, he noted that the column reflecting the
three percent penalty paid to the City was "not purely
penalty" but "primarily penalty." He explained
that the actual three-percent penalty paid could possibly be
determined if the "proper records are still
available." He also testified that the City kept track
of the thirty-percent payments made to Linebarger and UGSL
because the City made the payments to those parties.
cross-examination, Mr. O'Brien conceded that the column
reflecting the "assessed owner" did not necessarily
indicate the party to ultimately pay the delinquent tax,
interest, and penalties, and that the spreadsheet contained
no column identifying the individual actually paying. The
spreadsheet lacked additional information, such as whether
any checks sent to the City cleared, whether any payments
were refunded, or whether payments were made under protest.
Ultimately, despite the shortcomings of the spreadsheet
highlighted by defense counsel, the district court admitted
the document into evidence.
also called Li Downing, a Certified Public Accountant, who
analyzed the spreadsheet and was admitted as an expert in the
areas of data analysis and claims processing. For the period
of May 1, 1998, through April 29, 2005, Ms. Downing testified
that the City collected 9.89 million dollars in penalties,
and Linebarger and UGSL collected 22.4 million dollars in
collection fees. Plaintiffs attempted to address perceived
issues with the document, as Ms. Downing explained that only
a tiny fraction of the payments made could be attributed to
payments made by individuals other than the "assessed
owner, " such as succession proceedings or estate sales.
cross-examination, Ms. Downing acknowledged that the City, as
an "assessed owner, " was the top City penalty
payer according to the spreadsheet. She further acknowledged
that nearly seventy-four percent of payments made, which
included the combined City penalty and Linebarger and UGSL
collection fees, totaled less than one-hundred dollars. On
redirect, Ms. Downing suggested that information regarding
the penalties paid could be parsed out from the spreadsheet.
called their own expert, a Certified Public Accountant, Holly
Sharp, who was retained to assess the reliability of the
spreadsheet. Based on her analysis, she concluded that the
report was "not reliable to the persons or entities who
paid the collection penalties." In support of her
conclusion, she noted that the spreadsheet did not identify
the proper taxpayer under several circumstances, such as when
properties were purchased via tax sale or when bankruptcy
trustees paid penalties in lieu of assessed owners. She
further noted that a number of the assessed owners listed a
single name followed by "et al, "
suggesting it would be difficult to determine who, among
several owners, paid what amounts of the penalties and fees.
She testified that the spreadsheet included instances of
penalties being paid despite there being no tax due. She
further explained that banks do not retain canceled checks
beyond seven years, and that the Internal Revenue Service
retains back tax returns for only the previous six years,
presumably presenting difficulties of proof where such
documentation would be required.
additionally called a number of potential class
representatives. None testified that they paid the taxes,
interest, and penalties "under protest, " nor did
any specifically testify to rendering payment to any entity
other than the City. By judgment dated November 24, 2015, the
district court defined the class as follows:
Those persons and/or entities or their heirs, successors or
assigns, who pursuant to New Orleans City Ordinance No. 18637
were assessed city penalties and collection/penalty fees by
defendants and who paid these unconstitutional penalties and
collection/penalty fees from April 17, 2000 through February
district court granted class certification "as to
plaintiffs' claims against defendant, The City of New
Orleans." Additionally, the district court denied class
certification as to Linebarger and UGSL on the issue of
excessive legal fees, and granted certification as to the
issue of Linebarger and UGSL being debt collectors.
reasons for judgment,  the district court first explained its
rationale for limiting the class, noting that between April
17, 2000, and February 21, 2002, there existed "no
applicable prescriptive period within which" to protest
enforcement of any provision of the tax law (that is,
"payment under protest" as to penalties).
Specifically, prior to April 17, 2000, La. R.S. 47:2110(A)(2)
required "payment under protest" as to "any
amount of tax found due, or the enforcement of any provision
of the tax laws in relation thereto." Payment under
protest required that the taxpayer file suit for recovery of
the amounts paid within thirty days of the City's receipt
of notice that such payment was being made under protest.
After April 17, 2000, the same statute was amended, but
removed the language "or the enforcement of any
provision of the tax laws in relation thereto[, ]"
thereby removing the requirement that penalties be paid under
protest and suit filed within thirty days. Thereafter, on
February 21, 2002, the City Council adopted Ordinance No.
20556, requiring that penalties be paid under protest no
later than May 1st of the year in which the penalty was
imposed, and filing suit within thirty days of payment.
court then addressed the statutory requirements for class
certification as set forth in La.C.C.P. art. 591. First, as
to numerosity, regarding claims against the City, the court
noted testimony by Ms. Li Downing that the City's records
could identify roughly 31, 492 potential plaintiffs who paid
the unconstitutional penalties between April 17, 2000, and
February 21, 2002. The court also noted the absence of proof
as to those taxpayers who paid under protest prior to April
17, 2000. As to Linebarger and UGSL, the court found "no
evidence" for plaintiffs' claim of excessive legal
fees, but did find numerosity met as to the issue of their
status as "debt collectors." The court also found a
common question of law and fact of whether the
"delinquent taxpayers all paid penalties under an
unconstitutional Ordinance." However, the court found no
such common question as it related to the issue of excessive
legal fees collected by Linebarger and UGSL. Next, the court
found the claims of Thomas Monahan, III, and Sandra Monahan,
who "paid delinquent taxes and penalties within the
relevant time frame, " to be "typical of those of
the potential class members" and that they would
"be able to devote the time and energy needed of a class
representative." As to counsel's ability to
represent the class, the court held that both Mr. Fransen and
Mr. Hardin "have vigorously conducted this litigation
for a period of several years" and "have
demonstrated the competence, experience, and qualifications
necessary for counsel of the potential class." Lastly,
the court held that the issues relevant to the class
predominated over those affecting only individual members,
and that class action was superior to other forms of
litigating the claims.
April 14, 2016, the district court denied Plaintiffs
"Motion to Amend and/or for New Trial."
and Defendants appealed the November 24, 2015 judgment of the
district court, both raising numerous assignments of error.
Plaintiffs further appealed the April 14, 2016 judgment.
Court, in Gudo v. Administrators of Tulane Educ.
Fund, 2006-1515, pp. 3-4 (La.App. 4 Cir. 9/5/07), 966
So.2d 1069, 1073, explained the applicable standard of review
The central issue for this Court to address is whether the
trial court erred in granting the motion for class
certification. The standard of review of class certification
decisions is a bifurcated one. Watters v. Department of
Social Services, 2005-0324, p. 3 (La.App. 4 Cir.
4/19/06), 929 So.2d 267, 272. A trial court's decision
concerning class certification is reviewed under both a
manifest error and an abuse of discretion standard. Parry
v. Administrators of Tulane Educational Fund, 98-2125,
p. 3 (La.App. 4 Cir. 6/30/99), 740 So.2d 210, 212; Adams
v. CSX Railroads, 92-1077 (La.App. 4 Cir. 2/26/93), 615
So.2d 476. The factual findings are reviewed under the
manifest error/clearly wrong standard; the trial court's
discretionary judgment on whether to certify the class or not
is reviewed by the abuse of discretion standard. Id.
(citing Boudreaux v. State, Dep't of Transp. and
Dev., 96-0137, p. 5 (La.App. 1 Cir. 2/14/97), 690 So.2d
114, 119). These two standards of review correspond with the
two-step process for determining whether to certify a class
action. First, a trial court must find a factual basis exists
to certify an action as a class action. Second, the court
must exercise its discretion in deciding if certification is
appropriate. Singleton v. Northfield Ins. Co.,
2001-0447, p. 7 (La.App. 1 Cir. 5/15/02), 826 So.2d 55, 61.
class action vehicle is a nontraditional procedure meant to
allow a representative party or parties to stand in the shoes
of similarly situated parties to resolve issues of common
interest when joinder of all parties would be impracticable.
Brooks v. Union Pac. R. Co., 2008-2035, p. 9 (La.
5/22/09), 13 So.3d 546, 554. Such procedure establishes
res judicata effect as to those common issues shared
by a representative party and those other parties similarly
situated. Id. The Supreme Court, in Brooks,
The determination of whether a class action meets the
requirements imposed by law involves a rigorous analysis. The
trial court "must evaluate, quantify and weigh [the
relevant factors] to determine to what extent the class
action would in each instance promote or detract from the
goals of effectuating substantive law, judicial efficiency,
and individual fairness." McCastle v. Rollins
Environmental Services of Louisiana, Inc., 456 So.2d
612, 618 (La.1984). In so doing, "the trial court must
actively inquire into every aspect of the case and should not
hesitate to require showings beyond the pleadings."
Id. (Citing Stevens, v. Board of Trustees of
Police Pension Fund of City of Shreveport, 309 So.2d
144, 152 (La.1975)). "[I]f there is to be an error made,
it should be in favor and not against the maintenance of the
class action, for it is always subject to modification should
later developments during the course of the trial so
require." Id. at 620 (citing La. C.C.P. art.
593.1(B); Esplin v. Hirschi, 402 F.2d 94 (10th
Cir.1968); 1 H. Newburg, Class Actions, § 1160(e)
2008-2035 at p. 10, 13 So.3d at 554.
only purpose of a class action hearing is to determine
"whether the case is one in which the class action
procedural device is appropriate." Watters v.
Dep't of Soc. Servs., 2005-0324 to 2005-0326, p. 7
(La.App. 4 Cir. 4/19/06), 929 So.2d 267, 273. "Thus,
'the court is not concerned with whether the plaintiffs
have stated a cause of action or the likelihood that they
ultimately will prevail on the merits."
Watters, 2005-0324 to 2005-0326 at p. 7, 929 So.2d
at 273-74 ...