HomeMy WebLinkAboutTracFone - Opposition to Motion for Reconsideration1
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 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
APPELLANT TRACFONE’S OPPOSITION TO RESPONDENT CITY OF RENTON’S MOTION FOR RECONSIDERATION
I. INTRODUCTION
Respondent City of Renton’s (the “City”) Motion for Reconsideration must be denied
for several reasons. First, on June 9, 2021, the Hearing Examiner issued its Final Order in this
matter. The final order is not subject to a motion for reconsideration under the Renton
Municipal Code. Second, even if reconsideration was permitted, which it is not, the Renton
Municipal Code, limits reconsideration to the administrative record; the City’s introduction of
additional documents and testimony in the form of declarations is not permitted. Third, since
the issue involves the calculation of interest not the tax itself there is no colorable constitutional
gift of public funds issue. The City’s Tax Manager, Mr. Malone testified under oath that the
City has the ability to negotiate interest, so the argument clearly is unmeritorious.
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 2 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
II. STATEMENT OF FACTS
On June 9, 2021, the Hearing Examiner issued a 22- page Final Decision in this matter.
The Final Decision incorporated the findings of fact, conclusions of law and order granting
summary judgment dated March 8, 2021 on the issues of whether TracFone provides network
telephone service and whether RCW 35A.82.060 prohibits the City from imposing utility tax
on TracFone’s wholesale sales of airtime to retailers and distributors. The Final Decision also
recognized the partial refund the City unilaterally issued on May 15, 2021 correcting an error
TRS acknowledged with its zip code population ratio computation as well as making an
adjustment to the interest computation.
Prior to the issuance of the Final Decision, the parties exchanged information regarding
two alternative calculations of the additional refund due to TracFone. Counsel for the City
stated in an email—one not provided in the City’s motion for Reconsideration—the following:
Following-up on the Examiner’s e-mail yesterday afternoon suggesting the parties attempt to resolve the computation of interest and penalties, please be advised that the City of Renton agrees with the mechanics of TracFone’s interest computation now with the new analysis we were provided during closing argument (Group Health case), minus the rate used for 2019. Attached is a *revised* version of the refund calculation spreadsheet, reflecting the following revisions:
1. Removed retail margin markdown from tax calculation (Renton disagrees with this).
2. Changed base 2019 interest rate from 3% to 4%.
3. Changed penalty rate to 34% (29% for late penalty and 5% for substantially underpaid per RCW 82.32.090)
4. Removed refund interest calculation for 2019 per provisions in RCW 82.32.060, applying interest the last date of the month following the payment, which would be 12/31/2019 in this case.
5. Updated refund credit interest calculation through 6/3/2021.
Does TracFone agree with revisions #2 through 5 above? We understand that #1 – retail margin markdown – remains in dispute pending the Examiner’s ruling (T.B.D.). Please let us know TracFone’s position on the interest and penalty computation and whether the parties can agree or not.
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 3 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
Exhibit 1 to the Declaration of Scott Edwards.1 In that same email string, the City expressly
agreed to the calculations with the adjustments identified by their review. Id. In short, the
City’s tax staff reviewed and approved the calculations before they were submitted to the
Hearing Examiner and before the Hearing Examiner issued the Final Decision. In its Final
Decision, the Hearing Examiner held that TracFone is entitled to a refund of $66,513.50 with per
diem interest of $5.20 accruing from 5/27/21.
On June 18, 2021, well after the Final Decision was issued, the City filed a motion for
reconsideration claiming that there was an error in the calculations that it had reviewed,
negotiated, and expressly agreed to and that the Final Order should be revised to reflect a lower
sum.
III. LEGAL ARGUMENT AND ANALYSIS
A. The Final Order on this Tax Appeal is Not Subject to Reconsideration.
It is undisputed that the Hearing Examiner issued a Final Decision. RMC 4-8-
10(G)(3)(e)((x) states that “The jurisdiction of the Hearing Examiner ends when the Hearing
Examiner issues a final decision or recommendation in the matter and the time limit for all
appeals has been exhausted. All pre-hearing orders and non-final decisions and
recommendations of the Hearing Examiner are subject to reconsideration and correction.”
(Emphasis added). The section specifically excludes final decisions from being subject to
reconsideration. In its motion for reconsideration, the City failed to quote the italicized portion
of the ordinance.
The City attempts to rely on RMC 4-8-100 (I)(3); however, it fails to reconcile the fact
that reconsideration of final decisions is not specifically permitted. This is consistent with the
following principle of statutory construction:
1 TracFone only provides this information if the Hearing Examiner finds that a motion for reconsideration can
be heard and that the rules prohibiting the introduction of additional evidence do not apply in this forum.
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 4 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
The construction of two statutes shall be made with the assumption that the Legislature does not intended d to create an inconsistency,” and “[s]tatutes are to be read together, whenever possible, to achieve a ‘harmonious total statutory scheme.’
State ex. Rel. Peninsula Neigh. Assn., v. Dep’t of Transp., 142 Wn2d 328, 342, 12 P.3d 134
(2000); quoting Employco Pers. Servs., v. City of Seattle, 117 Wn2d 606, 614, 817 P.2d 1373
(1991). Here the specific should control the general. If the City Council wanted to extend the
opportunity to seek reconsideration of a final decision, it could have said so but it chose not to.
Finally, the section of the ordinance upon which the City relies (RMC 4-8-100((I)(3)appears
to be focused on land use matters, not tax appeals since it specifically refers to RCW 36.70B
(Local Project Review) and shoreline permits.
B. The Motion Must be Denied Because it Depends upon Facts Outside the Record.
Even if it is determined that reconsideration is appropriate, the motion must be denied
because it relies on facts outside the record. RMC 4-8-100(I)(3) specifically limits the scope
of the motion to “…evidence in the administrative record unless authorized by chapter 36.70B
RCW, relied upon by such appellant, and the decision make may, after review of the record,
take further action as deemed proper by said decision maker.”
The City’s motion specifically relies upon a new declaration from Nate Malone and
new calculations that are not part of the record. This is prohibited under the Code.
Because the City’s motion relies upon new facts outside the record, the motion also
fails to meet the standards for reconsideration recognized under the Civil Rules. Under Civil
Rule 59, a motion for reconsideration must be (1) closely related to a position previously
asserted and (2) does not depend upon new facts. Newcomer v. Masini, 45 Wash.App. 284,
287, 724 P.2d 1122 (1986); Reitz v. Knight, 62 Wash.App. 575, 581 n.4, 814 P.2d 1212 (1991).
The trial court’s discretion extends to refusing to consider an argument raised for the first time
on reconsideration absent good cause. River House Development Inc. v. Integrus Architecture
PS, 167 Wash.App 221, 231, 272 P.3d 289 (2012), Rosenfeld v. U.S. Dept. Of Justice, 57 F.3d
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 5 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
803, 811 (9th Cir. 1995); Fairhaven Land & Livestock Co., LLC b. Chuckanut Trails Water
Ass’n 148 Wash App 1046, 2009 WL 429893 (2009).
The motion does not attempt to revise a “technical defect” in the decision. RMC 4-8-
100(H)(7). Rather, it attempts to re-calculate the amount of a refund that the City represented
it had reviewed and approved prior to issuance of the Final Order. The City previously
represented to TracFone’s counsel that it had reviewed and approved the calculations.
TracFone believed this representation.
C. There is No Gift of Public Funds Issue.
Finally the City makes the preposterous argument that somehow the failure to correct
what it now claims is an error would result in a gift of public funds. This argument is not
supported by the cases that it cites and in fact is controverted by the testimony of Mr. Malone.
The amount “at issue” in the City’s motion is not the tax itself, it is the calculation of interest.
There is no gift of public funds with respect to interest. The cases relied upon by the City do
not support any argument that there is a gift of public funds issue. In City of Tacoma v.
Taxpayers of City, 108 Wn.2d, 702, 709, 743 P.2d 793 (1987), the Washington Supreme Court
found that the City’s energy conservation program did not constitute a gift of public funds.
There was no issue in the case over recovery of interest charges. The court held that absent
proof of donative intent or a grossly inadequate consideration, courts do not inquire into the
adequacy of consideration. Id. Similarly, in General Telephone Co. of Northwest, Inc. v. City
of Bothell, 105 Wn.2d 579, 716 P.2d 879 (1986), the court found no gift of public funds in a
utility tariff that required the City to pay for undergrounding arial telephone facilities. There
was no issue in the case about whether failing to receive all claimed interest was a gift of public
funds. In this case, TracFone has not only paid but in fact overpaid the tax as well as interest.
The elements of a gift of public funds are simply not present. In fact, Mr. Malone testified
during his deposition that the City has the power to negotiate resolution of tax matters by
conceding the amount of interest that the City would receive:
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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 6 LANE POWELL PC
1420 FIFTH AVENUE, SUITE 4200
P.O. BOX 91302
SEATTLE, WA 98111-9402
206.223.7000 FAX: 206.223.7107
Q. Do you think it's fair to the taxpayer to have delayed sending out this audit and allowing penalties and interest to accrue for as long as it did because the City or its consultant wanted to see if there was some other reason for supporting their findings? A. I -- I think no additional penalties would have accrued because we were well past the maximum time. In regards to the interest, I do think -- and again I think we have discussed this, that there would be leniency with the City if -- if the interest was in dispute, if that was the only dispute, and TracFone had agreed to pay the outstanding tax liability that was assessed and accurate.
Mr. Malone’s testimony, to which the Examiner has accorded great weight in this matter,
makes it clear that there was no constitutional impairment to the City negotiating an agreement
regarding the amount of interest. That is likely why his declaration submitted in support of this
motion did not assert a gift of public funds issue.
IV. CONCLUSION
The City’s motion is not authorized under RMC and fails to meet the standards for
reconsideration. For the foregoing reasons, the motion must be denied.
DATED: June 25, 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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125110.0002/8537579.1
TRACFONE’S OPPOSITION TO RENTON’S
MOTION FOR RECONSIDERATION - 7 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 25th day of June, 2021, at Seattle, Washington.
Angela Craig, Legal Assistant