Court Opinion

ID: 9680720
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:37:21.864523+00
Date Added: 2024-06-11T18:17:30.131119
License: Public Domain

Annabelle Clinton Imber, Justice, dissenting. The majority concludes that the Arkansas Unfair Cigarette Sales Act, codified at Ark. Code Ann. §§ 4-75-701 — 713 (Repl. 2002) (“the Act”), gives the Arkansas Tobacco Control Board (“the Board”)1 the broad power to change the Act’s presumptive cost of doing business. Because I believe the Act does not confer this authority on the Board, I must respectfully dissent. The answer to this question can simply be found within the plain language of the Act itself. Section 4-75-702(5) (B) states the cigarette wholesaler’s presumptive cost of doing business: In the absence of proof of a lesser or higher cost of doing business by the wholesale dealer making the sale, the cost of doing business by the wholesale dealer shall be presumed to be two percent (2%) of the basic cost of the cigarettes to the wholesale dealer, plus cartage to the retail outlet, if performed or paid for by the wholesale dealer, which cartage cost, in the absence of proof of a lesser or higher cost, shall be presumed to be three-fourths of one percent (0.75%) of the basic cost of the cigarettes to the wholesale dealer. Ark. Code Ann. § 4-75-702(5)(B) (Repl. 1996) (emphasis added). The plain language of this subsection provides a mechanism to show a cost of doing business different than the 2% presumption. There is no mention made that the presumption can be changed. The majority seems to state that the cost surveys mentioned in § 4-75-706 are the vehicle by which the Board may change the Act’s presumptive cost; but that, in this case, the Board failed to follow the required procedures to do so. However, § 4-75-706 states in pertinent part: (a)(1) The Director of the Arkansas Tobacco Control Board shall prescribe, adopt, and enforce rules and regulations relating to the administration and enforcement of this subchapter. (2) (A) The director is empowered to and may from time to time undertake and make or cause to be made one (1) or more cost surveys for the state or such trading area as he shall define, and when the cost survey shall have been made by or approved by the director, it shall be permissible to use the cost survey as provided in § 4-75-711(b). Ark. Code Ann. § 4-75-706(a) (Repl. 2002) (emphasis added).2  As can be seen from the plain language of the statute, the Director must enforce this subchapter, but there is no authority to change the subchapter, contrary to the majority’s assertion. In fact, by changing the presumptive cost of doing business, the Board actually violated, rather than enforced, the Act. In regard to the cost surveys mentioned in § 4-75-706(a)(2)(A) above, there is no indication that those surveys may be used by the Board to change any portion of the Act. While this subsection does give the Board the authority to use cost surveys, the only enumerated use of them is found in § 4-75-711(b), as follows: 4-75-711 Determination of cost generally — Cost surveys. (a) In determining cost to the wholesaler and cost to the retailer, the court shall receive, and consider as bearing on the bona fides of the cost, evidence tending to show that any person complained against under any of the provisions of this subchapter purchased the cigarettes involved in the complaint before the court at a fictitious price or upon terms or in such manner or under such invoices as to conceal the true cost, discounts, or terms of purchase, and shall also receive and consider as bearing on the bona fides of the costs, evidence of the normal, customary, and prevailing terms and discounts in connection with other sales of a similar nature in the trade area or state. (b) Where a cost survey pursuant to recognized statistical and cost accounting practices has been made for the trading area in which a violation of this subchapter is committed or charged to determine and establish on the basis of actual existing conditions the lowest cost to wholesalers or the lowest cost to retailers within the area, the cost survey shall be deemed competent evidence in any action or proceeding under this subchapter as tending to prove actual cost to the wholesaler or actual cost to the retailer complained against, but any party against whom any such cost survey may be introduced in evidence shall have the right to offer evidence tending to prove any inaccuracy of the cost survey or any state of facts which would impair its probative value. Ark. Code Ann. § 4-75-711 (Repl. 2002).3  The plain language of the Act, when read in its entirety, makes it clear that while the Board may perform cost surveys to determine the lowest cost available to wholesalers or retailers in the state or in a trading area, and presumably the Board could then present those surveys to the General Assembly in order to make a convincing argument for the legislature to make a change in the presumptive cost of doing business, there is no authority in this Act for the Board to change that presumptive cost of doing business itself. In fact, the only specific way the Act empowers the Board to use those cost surveys is as evidence in an action or proceeding against a wholesaler or retailer for violation of the Act. In that instance alone, the Act authorizes the Board to use the cost surveys if they were performed pursuant to correct accounting practices, but allows the wholesaler or retailer charged with violating the Act to rebut those surveys if the wholesaler or retailer can offer evidence that would tend to show the cost surveys were inaccurate or that some other facts make the cost surveys lack probative value. In this case, the Board was not able to show that the cost surveys in question were performed pursuant to recognized statistical and cost accounting practices. Even if the Board had been able to make such a showing, however, it still had no authority to use those cost surveys in a way that changed or violated the Act itself. There was no proceeding against a wholesaler or retailer of the type mentioned in § 4-75-711(b) prior to the passage of the Miscellaneous Tax Regulation 1988-2, which changed the presumptive cost of doing business from 2% to 4%. Because the Act does not confer authority on the Board to change any portion of the Act itself, including the presumptive cost of doing business, I must respectfully dissent from the majority’s holding that the Board has the broad power to do so.   Prior to the passage of Act 1237 of 1999, the Department of Finance and Administration (DFA), rather than the Arkansas Tobacco Control Board, was the agency empowered to enforce the Unfair Cigarette Sales Act. Because this action was originally filed in 1995, the use of the term “Board” throughout will include both the Board and the DFA.    Until the passing of Act 1237 of 1999, the Act empowered the Director of the Arkansas Department of Finance and Administration to perform these duties. With that exception, this portion of the Act, and the acts it authorizes, remained the same.    This subsection has not been changed since Act 101 of 1951.