HomeMy WebLinkAboutTracFone's Reply in Support of its Motion to Exclude Certain Exhibits1
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 1 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
BEFORE THE HEARING EXAMINER OF THE CITY OF RENTON
RE: TracFone Wireless, Inc. Administrative Appeal
TRACFONE’S REPLY IN SUPPORT OF TRACFONE’S MOTION TO EXCLUDE CERTAIN EXHIBITS
I. INTRODUCTION
In its submission opposing TracFone’s motion, the City fundamentally misrepresents
the nature of this current proceeding. What is before the hearing examiner is an appeal of an
administrative decision following a four-year long audit that culminated in a $336,442.69
utility tax assessment that TracFone had to pay as a condition precedent to filing this appeal.
Pursuant to RMC 5-26-18(B)(5), TracFone bears the burden of proving that the Department’s
decision was erroneous—a burden that is exacerbated if the City is permitted to expand the
record of its assessment to include materials that the City did not rely on when issuing the
assessment. The time for the City to investigate TracFone’s “business model” was during the
audit—not after the audit was concluded and the assessment issued. The City resists this
motion because it is attempting to avoid defending its assessment based upon the virtual
absence of information about what TracFone does and more importantly, what it doesn’t do,
contained in the audit record prior to issuance of the assessment.
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 2 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
The major questions presented by this motion are:
• In this appeal proceeding, should the City be limited to the record contained in
the audit file of the audit that culminated in the issuance of the assessment;
and
• Are the appellant’s due process rights impaired if the City is permitted to
“supplement” the record with reliance on documents that were not relied on in
preparing or issuing the assessment.1
II. ARGUMENT
A. The Renton Municipal Code Empowers the Hearing Examiner to Decide the Rules Governing Evidence Including the Record Being Appealed.
It is undisputed that this appeal was filed pursuant to the provisions contained in RMC
5-26-18. Section 5-26-18(B)(4) provides that the appeal hearing will be conducted “…in
accordance with this chapter [5-26] and the procedures developed by the hearing examiner…”.
The provisions governing land use actions contained in RMC 4-8-100 do not strictly apply to
this proceeding but are merely guidance when the hearing examiner conducts hearings on other
subjects.
1. The City audited TracFone for more than five years before issuing the tax
assessment (June 2013 to February 2019). The City cites no rule or case law supporting the
contention that it should be able to submit evidence at the hearing that was not part of the audit
and obtained after the assessment was issued. Nevertheless, the City contends that barring it
from presenting post-hoc justifications for the assessment will deprive it of due process. The
contention is not supported by the procedural posture of this case.
Throughout the more than five years the audit was conducted, the City had ample
opportunity to request and obtain the information that it or its outside auditor needed in order
to complete the assessment. It was only after the assessment was issued, the money was paid,
and the appeal was filed, that TracFone had the opportunity to request the audit record the City
1 TracFone’s motion also requests exclusion of the City’s Exhibit 7, referred to as Tax Rule 242 because it has never been adopted. The City did not address this part of TracFone’s motion so we presume that it does not dispute the Exhibit should be excluded.
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 3 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
and its outside auditor assembled and relied upon to support the assessment. In other
submissions, TracFone has documented how arduous the effort has been for it to obtain the
record.
The only discovery that the City propounded were requests for admissions. The City
did not seek the production of documents or responses to interrogatories and understandably
so since it had retained Tax Recovery Service to secure all necessary documents and
information to determine whether the utility tax applied to TracFone’s activities and if so, to
properly calculate the amount of tax due. Nevertheless, the City’s preliminary exhibit list and
its submission in support of summary judgment includes contracts requested after the
assessment was issued (exhibits 13-17) but that were not relied upon in issuing or affirming
the assessment, marketing materials, terms and conditions obtained from the internet and other
sources well after this appeal was filed (exhibits 18 and 19).
2. All relevant evidence supporting the assessment was supposed to be in the audit
file. TracFone sought and the City agreed to produce the audit file—the place where, according
to Mr. Malone, all the relevant information obtained during the audit was supposed to reside.
Malone Dep., at 20-21, attached as Degginger Decl. Ex. 4. The admission of exhibits about
TracFone’s activities that were not in the audit file and were obtained after the assessment was
completed is inconsistent with notions of due process. Nothing in RMC 5-26-18 suggests that
the appellant will be required to bear the burden of proof to reverse a decision whose record
continues to morph.
3. Evidence that was not relied upon in making the assessment decision is not
relevant and should be excluded. Neither TRS nor the City relied upon any information in
TracFone’s contracts with wireless providers or contracts with retailers to (a) issue the
assessment in February 2019 or (b) for the Department in October 2019 to determine “…that
the City’s February 14, 2019 assessment was correct”. Jan Hawn, the Administrator who was
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 4 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
responsible for issuing that decision testified that she had not reviewed the contracts. Hawn
Dep., at p. 63, attached as Degginger Decl. Ex. 5.
Moreover, allowing the City to backfill the record to retroactively support a decision
that was more than five years in the making is terrible public policy. The City should not be
permitted to decide for itself what documents “in the public domain” it can seek to rely on to
justify an assessment prepared as the culmination of a more than five-year audit investigation
of the taxpayer.
B. The Authorities Cited by TracFone Provide Valuable Guidance to the Hearing Examiner in Ruling on What Should be Part of the Record in this Appeal.
The City erroneously contends that the authorities cited by TracFone in support of its
motion do not apply in this instance because the Renton Municipal Code lacks “any express
limitation” that the City’s evidence must be confined to the audit file. TracFone respectfully
disagrees.
This is an appeal of a final administrative determination by the Administrative Services
Director Ms. Hawn. RMC 5-26-18(B)(4) states that at the hearing “…the taxpayer and the
Administrator shall have the opportunity to introduce evidence relevant to the subject of the
appeal.” Unfortunately, for the City the word “evidence” is not preceded by the either word
“new” or the word “additional”. This is precisely the lesson of the Towle v. Washington State
Dept. of Fisheries decision. In Towle, the court found it was error for the reviewing officer to
consider additional evidence when the governing statute did not expressly permit the
consideration of additional evidence. Id., at 205. The Court of Appeals went on to state:
In construing a statute, it is always safer not to add to … the language of the statute unless imperatively required to make it a rational statute. Applied Indus. Materials Corp. v. Melton, 74 Wash. App 73, 79, 872 P.2d 87 (1994). “Courts cannot read into a statute words which are not there.” Coughlin v. Seattle, 18 Wash. App. 285, 289, 567 P.2d 262 (1977). The negative implication from the statute’s failure to give the reviewing officer express power to take additional evidence is that the reviewing officer cannot take additional evidence outside the record established by the presiding officer.
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 5 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
Id., at 205-06. Clearly, the same result should apply here and the City’s exhibits 13-19 should
be excluded.
III. CONCLUSION
The City should be required to rely upon the record it developed in the four years
before issuing the substantial assessment to TracFone, and it should not be allowed to
supplement the record with additional exhibits which in hindsight it wishes were there. For
the foregoing reasons, TracFone respectfully requests that exhibits 7, 13-19 on the City’s
preliminary exhibit list be excluded.
DATED: February 19, 2021
LANE POWELL PC
By Scott M. Edwards, WSBA No. 26455 edwardss@lanepowell.com Grant S. Degginger, WSBA No. 15261 deggingerg@lanepowell.com Attorneys for TracFone Wireless, Inc.
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125110.0002/8361509.3
TRACFONE’S REPLY IN SUPPORT OF MOTION
TO EXCLUDE CERTAIN EXHIBITS - 6 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
CERTIFICATE OF SERVICE
I hereby certify under penalty of perjury of the laws of the State of Washington and the
United States that, on the date listed below, I caused to be served a copy of the attached
document to the following persons via electronic mail:
Kari L. Sand Ogden Murphy Wallace P.L.L.C. 901 Fifth Avenue, Suite 3500 Seattle, WA 98164 ksand@omwlaw.com Cynthia Moya Renton City Clerk 1055 So. Grady Way Renton, WA 98057 cmoya@rentonwa.gov olbrechtslaw@gmail.com
Executed on the 19th day of February, 2021, at Seattle, Washington.
s/ Barbara LaBelle Barbara LaBelle, Legal Assistant