This week’s Alabama Law Weekly Update focuses on two recent decisions which interpret and define several Alabama statutes, albeit in very different contexts. In the first case, the Alabama Court of Civil Appeals considered whether a retailer of cutlery and utensils is responsible for any sales taxes associated with a sale of those products to certain fast-food restaurants. In the second case, the 11th Circuit considered the interplay of two Alabama governmental immunity statutes in the context of negligence claims brought against an Alabama municipality.
State Department of Revenue v. Kelly’s Food Concepts of Alabama, LLP, No. 2130009, — So. 3d — (Ala. Civ. App. 2014).
This case is the result of an appeal from a decision of the Administrative Law Division of the State Department of Revenue (the “Department”). The Department determined that Kelly’s Food Concepts of Alabama, LLP (“Kellys”), a retailer of disposable cutlery and tableware to certain fast-food restaurants, owed sales taxes to the State of Alabama on account of its sales of the cutlery and tableware to fast-food restaurants. Kellys appealed the decision to Circuit Court of Dallas County, Alabama, and the Dallas County Court reversed the decision of the Department. This appeal followed.
On appeal, the Department argued that it was owed sales tax on the price of the cutlery and tableware sold to the fast-food restaurants pursuant to the Alabama sales tax act, Ala. Code § 40-23-2(1). Kellys disagreed, asserting that the sales of the cutlery and tableware were “wholesale sales,” which are exempt from sales tax under Ala. Code § 40-23-1(a) (9)a. Thus, the issue decided by the Court of Civil Appeals was whether the sales by Kellys to the fast-food restaurants constituted nontaxable “wholesale-sales transactions.”
In its analysis, the Court of Civil Appeals referred to its prior opinion Alabama Department of Revenue v. Logan’s Roadhouse, Inc., 85 So. 3d 403, 404 (Ala. Civ. App. 2011), where it determined that “[a]ll that is required for purposes of classifying a bulk sale to a retailer … as a nontaxable ‘wholesale sale’ is that a subsequent retail ‘resale’ of tangible personal property occur; there is no statutory requirement for purposes of classifying a sale as a retail sale that a separate price be overtly stated and paid.” The Court implied that the purpose behind the “wholesale sale” carve out is that sales taxes are meant to be borne by consumers and not retailers. With those things in mind, the Court of Civil Appeals determined that the sales of the cutlery and tableware at issue were nontaxable wholesale sales because the fast-food restaurants at issue routinely sold its food with the purchased cutlery and tableware included as part of the prepared meal. That being the case, the Court determined that the cutlery and tableware purchased by the fast-food restaurants were purchased in order to be re-sold, and that it was immaterial that the cutlery and tableware were not individually priced for the resale.
Fowler v. Meeks, 2014 WL 2726919 (11th Cir. 2014 ).
In Fowler v. Meeks, the Eleventh Circuit considered the scope of the City of Andalusia’s (the “City”) immunity to certain types of civil lawsuits. The dispute in question arose out of a botched drug task force raid. Timothy Shane Fowler (“Fowler”) was incorrectly targeted by members of the Covington County drug task force and the City’s Police Department when he arrived at a residence to perform some septic tank repair work. The task force members “forcibly removed [Fowler] from the car, handcuffed him, threw him to the ground, threatened him and kicked him” while at all times pointing their guns at Fowler. Fowler was injured by the incident and filed several claims in the District Court for the Middle District of Alabama, including Alabama state law negligence claims against the City.
The City filed a motion to dismiss the negligence claims citing state-agent immunity under Alabama Code §§ 6-5-338 and 11-47-190. The District Court denied the City’s motion, and an interlocutory appeal to the Eleventh Circuit on that issue followed.
The Eleventh Circuit addressed § 11-47-190 immunity first. Under that Code Section, an Alabama municipality is immune from suit for injuries caused by its agents, like the police officers in this case, unless the injury resulted from the “neglect, carelessness, or unskillfulness” of the agent. In its analysis, the Court initially acknowledged that under that standard, a plaintiff can avoid dismissal of his or her suit by alleging facts indicative of negligence on the part of an agent of a municipality. However, it ultimately concluded that in this case, Fowler’s complaint only alleged intentional conduct, i.e., the police officers knew that he was not the subject of the drug raid andknew that he was not resisting arrest. Such allegations, according to the Eleventh Circuit, could not support the § 11-47-190 carve out for “neglect, carelessness, or unskillfulness,” or, in other words, negligence.
The Eleventh Circuit also determined that the City was shielded from suit for negligence under Ala. Code § 6-5-338. That section provides police officers with immunity from tort liability for actions “arising out of [their] conduct in performance of any discretionary function within the line and scope of [their] law enforcement duties.” The Eleventh Circuit found that the officers in question were performing discretionary functions within the scope of their employment during the drug raid in question. In reaching that conclusion, the Court cited Alabama cases, including Hollis v. City of Brighton, 950 So. 2d 300, 309 (Ala. 2006), which held that the immunity detailed in § 6-5-338 applies when an agent is “exercising judgment in the enforcement of the criminal laws of the State, including, but not limited to, law-enforcement officers’ arresting or attempting to arrest persons … .”