As the parties did not raise the issue below, it is not proper for us to address it further in this case. Although counsel and others may desire guidance on the impact of Andrews [the minimum wage case], it would be imprudent of this court to delve into the constitutional doctrine further without full development before the circuit court and when neither party is asserting it.As to the facts, the court sided with the state and said it was a matter of statutory interpretation, properly followed by DFA — the meals given to employees should be taxed at retail value, not wholesale value. So the state won, but not because it was immune from lawsuit.
I agree with the majority that this lawsuit is not barred by sovereign immunity.He went on to elaborate that the waiver of sovereign immunity belonged solely to the people, not to the legislature and also not to state agencies such as DFA. But there are other exceptions.
Here, the state is not named as a defendant. The question to be answered, then, is whether the state is the real party in interest, as defined by this court. I submit that it is not. It is true that appellee seeks a refund of taxes remitted to the Department of Finance and Administration. But this alone does not submit the state to liability under the circumstances of this case. Appellee paid the disputed tax amount under protest. At that point, appellee was officially on notice that the state’s entitlement to the funds was in dispute. This court recognized that a suit to recover taxes paid under protest is not barred by sovereign immunity in McCain v. Crossett Lumber Co.. In that case, this court held that a suit seeking a refund of unemployment compensation taxes paid under protest was not a suit against the state because the money never became part of the state’s funds, but were held in trust or escrow until the dispute was resolved.Justice Shawn Womack issued a partial dissent saying the tax should be applied at wholesale value.
The majority’s decision to now avoid answering the very issue that the majority ordered to be briefed leads to even more confusion rather than clarity as to the status of the law on sovereign immunity.Justice Josephine Hart, the other dissenter in the groundbreaking
Next, I disagree with the majority’s decision to treat sovereign immunity like an affirmative defense. Specifically, the majority states that “[a]lthough sovereign immunity certainly has jurisdictional qualities, this court historically has treated it like an affirmative defense that must be preserved. Following the majority’s decision in Andrews, saying that sovereign immunity is like an affirmative defense is akin to saying a Bengal tiger is like a house cat. Further, I disagree because this position yields the nonsensical result that in each lawsuit against the State, trial counsel for a State entity may waive sovereign immunity—either as a result of poor lawyering skills, negligent omission, or even as a matter of trial strategy. This is fundamentally unfair to the citizens of Arkansas and completely absurd. Again, as stated in my dissent in Andrews, the decision to hold that the legislature may no longer waive sovereign immunity necessarily means that the executive and judicial branches likewise may not waive sovereign immunity because any other interpretation would result in treating the legislature differently from the executive and judicial branches.
..while I should welcome any effort to walk back the unreasonably broad pronouncements in Andrews, I cannot do so in this case. As Justice Wynne noted in the latter half of his concurring opinion, even if the issue had been raised and ruled on by the circuit court—which, as Justice Baker ably notes, it was not—sovereign immunity is not implicated in a tax case where payments are made under protest. I am troubled that the majority saw fit to essentially create this issue, order briefing by the parties only to knock it down like it was a straw man. The majority opinion is a unique example of an advisory opinion; the only legal controversy it resolves is the legal controversy that the majority created. I agree with Justice Baker’s assessment that it was improvident to address.Things clearer now, lawyers? Bottom line in this case: The state WAS sued. The court allowed the suit. The state still won.