PROVIDENCE, R.I. (Legal Newsline) - The Rhode Island Supreme Court has held that Dell was not negligent by collecting sales taxes on certain services purchased in conjunction with the sale of its computer products.
In the class action lawsuit, two plaintiffs, Nicholas T. Long and Julianne Ricci, claimed Dell violated the DTPA and was negligent when it collected sales taxes from them in 2000, according to the June 27 opinion.
Justices Paul A. Suttell, Maureen McKenna Goldberg, Francis X. Flaherty and Gilbert V. Indeglia voted in the majority, with Goldberg authoring the opinion.
Justice William P. Robinson III concurred in part and dissented in part.
"A justice of the Superior Court granted summary judgment in favor of Dell on both counts," the opinion states. "This case has been pending for more than ten years and thus far has resulted in two opinions of this Court. It is not over."
The Supreme Court of Rhode Island affirmed the grant of summary judgment on the negligence count and on the request for injunctive relief by Long.
"However, the grant of summary judgment on the (Deceptive Trade Practices Act) count by... Ricci is vacated," the opinion states. "Additionally, we affirm the Superior Court justice's grant of the plaintiffs' motion to strike the tax administrator's affirmative defenses."
Long and Ricci purchased Dell computers in late 2000 and also selected an optional service contract. In May 2003, they filed a class action lawsuit against Dell, claiming it charged both Ricci and Long sales tax on nontaxable services.
The two-count complaint alleged that the defendants violated the DTPA and were liable for negligence.
Dell moved to stay the proceedings and compel arbitration, arguing that by accepting delivery of the goods, the plaintiffs agreed to the terms and conditions agreement, which contained an arbitration provision.
The Superior Court denied that motion and entered an order of final judgment on March 29, 2004. The defendants appealed from that judgment.
In March 2007, while the appeal of the order denying the motion to compel arbitration was pending, the defendants moved for summary judgment.
In response, the plaintiffs requested that the Tax Administrator for the Rhode Island Division of Taxation be notified of the proceeding because the defendants' contentions on summary judgment implicated Rhode Island tax law.
The tax administrator then moved to intervene in the case. The Superior Court justice permitted the tax administrator to intervene solely "for the purpose of appearing and being heard on the issues of subject matter jurisdiction, the proper interpretation and construction of tax regulations and statutes, and the application and constitutional validity of tax statutes."
The tax administrator moved to dismiss the case for lack of subject-matter jurisdiction. The Superior Court justice denied the motion to dismiss. The defendants and the tax administrator petitioned the Rhode Island Supreme Court for writs of certiorari to review the question of subject-matter jurisdiction, and the court granted the petitions.
On Dec. 14, 2009, the Rhode Island Supreme Court issued separate opinions on these preliminary issues.
"In DeFontes... we held that the Superior Court justice properly denied defendants' motion to compel arbitration because plaintiffs did not agree to be bound by the terms and conditions in the shrinkwrap agreement contained in the computer's packaging," the opinion states. "In Long... we held that that the Superior Court had subject-matter jurisdiction over the DTPA claim and ancillary jurisdiction over the negligence claim. We remanded the case to the Superior Court."
With the arbitration and subject-matter jurisdiction issues resolved, the Superior Court turned to the defendants' summary judgment motion.
After concluding that Ricci was improperly taxed, the Superior Court next addressed Dell's legal arguments that it was nonetheless not liable under the DTPA or in negligence.
Addressing the negligence claim, the Superior Court concluded that Dell did not owe a duty to Ricci, and therefore Ricci did not have an actionable tort claim.
Turning to the DTPA claim, the court concluded that "as a matter of law, Dell's actions did not constitute negligence or violate the DTPA."
On April 9, 2012, an order and final judgment entered, granting the defendants' motion for summary judgment and plaintiffs' motion to strike. The plaintiffs appealed the order granting summary judgment to defendants, and the tax administrator appealed the order striking his affirmative defenses.
In his opinion, Robinson stated that he concurred in the majority's ruling concerning its affirmance of the Superior Court's grant of summary judgment in Dell's favor on the count of negligence; its affirmance of the Superior Court's dismissal of the requests of Long for injunctive and declaratory relief; and its affirmance of the Superior Court's granting of plaintiffs' motion to strike the tax administrator's affirmative defenses.
"However, as for the majority's vacating the Superior Court's granting of Dell's motion for summary judgment on count 1 of the complaint (alleging violation of the Deceptive Trade Practices Act), I must respectfully, but very vigorously, record my dissent," Robinson's opinion states. "Taking into account settled principles of law as well as the plain meaning of the following words-immoral, unethical, oppressive, unscrupulous, and material-I am convinced that no reasonable jury could conclude that Dell violated the Deceptive Trade Practices Act (DTPA)."
The majority opinion states that, while Dell can argue that it was operating under a "good faith interpretation of tax law," a jury could also infer that "Dell's efforts to avoid its own tax nexus with Rhode Island unfairly resulted in consumers being charged for taxes that they should not have been charged," Robinson's opinion states.
"Contrary to the stance adopted by my colleagues in the majority, I am completely unable to perceive any evidence presented by Ms. Ricci suggesting that Dell's actions were anything other than a 'good faith interpretation of tax law,'" his opinion states.
"Moreover, in what I consider to be a further departure from common sense, the majority perceives a possible deception and unfairness in a practice from which Dell does not profit one whit," he states.
"For the reasons which I have just discussed, I must dissent from the majority's determination that a genuine issue of material fact remains with respect to whether Dell's actions were immoral, unethical, oppressive, or unscrupulous and, accordingly, unfair."
Rhode Island Supreme Court case number: 12-248
From Legal Newsline: Kyla Asbury can be reached at firstname.lastname@example.org.