ANALYSIS OF JUNE 9, 2022 SUPREME COURT DECISIONS
(Posted June 9, 2022) Today is an anniversary of one of the proudest moments for lawyers in our nation’s history. There are many such moments, but today a lawyer had the courage to take on a bully who had become a powerful demagogue. On this date in 1954, an Army lawyer named Joseph Welch dared to fight back against powerful Senator Joseph McCarthy. With the twice-stated question, “Have you no sense of decency, sir?” Welch brought down an entire movement that had been built on fear and hatred.
We lawyers occasionally suffer from a bad public image. Moments like this remind us that we can be among society’s best, especially when we act with courage.
Taxation
The primary theme of City of Charlottesville v. Regulus Books, LLC is the question whether a holding company that owns and licenses intellectual-property rights is subject to local business taxation. But the side issue of taxation of costs provides the real news, in my view.
A Charlottesville lawyer has, for some time now, enjoyed a successful career as a fiction writer. He created the holding company and assigned his intellectual property rights to it; the company in turn grants publication rights to various publishers. The lawyer filed tax returns reporting business income under Schedule C. The City picked up on that; a search revealed no business license issued to the lawyer or to the holding company.
Tax bills followed, as they are wont to do wherever there’s money. The lawyer paid one bill under protest and challenged the next one in a lawsuit. The parties filed cross-motions for summary judgment.
The circuit court ruled in favor of the lawyer, holding that the tax ordinance was unconstitutionally vague. Today the Supreme Court affirms, though on different grounds. It holds that the holding company – the entity that had filed the suit – didn’t fall within a proper local-taxation category. The company doesn’t publish and it doesn’t offer a product. Nor does it offer a service to others. It merely holds rights and licenses them to others. The justices thus affirm under the right-for-a-different-reason doctrine.
The side issue that I mentioned relates to a small amount of money: $767.20. The circuit court had awarded that amount for costs, based on an itemized list containing entries for “the cost of filing, process service fees, transcript fees, transcript shipping fees, pro hac vice admission fees, and fees for case file copy requests.”
Here, the City gets at least some relief; the Supreme Court rules that some of these entries weren’t “essential for the prosecution of the suit.” The court thus remands for recalculation of the cost award.
But this victory may prove to be short-lived. It’s true that the costs statute doesn’t allow an award in the trial court for costs that aren’t necessary for the trial. A transcript – probably the largest component of this modest award – isn’t essential if all you want to do is try the case. But it really-most-sincerely is essential for an appeal, and Code §17.1-128 authorizes taxation of transcript costs in the appellate court. Rule 5:35(c) confirms that. Thus, the holding company may get an award of some of these struck costs merely by filing a verified bill in the Supreme Court.
Parties
As an alumnus of the Virginia Beach City Attorney’s Office, I’m well aware that a locality’s governing board is a different entity from the locality itself. This distinction is case-dispositive in Marsh v. Roanoke City, a zoning appeal brought by several neighbors of a Roanoke halfway house. The neighbors sought to prohibit the operation of the house in their figurative back yard.
The zoning-appeal statute requires that any court action must name the governing body of the locality as a necessary party. But the neighbors listed only “Roanoke City,” which I take to be a shorthand reference to the City itself. The circuit court noted the difference and dismissed the case. It refused to allow correction of a misnomer, because even the correct name – the City of Roanoke – isn’t the proper party. The neighbors’ petition never even uses the word council.
Based on this reasoning, the Supreme Court affirms today in a published order. It notes the difference between misnomer and misjoinder, and finds that this is plainly a misjoinder – the neighbors simply sued the wrong party.
Standing
Let’s check next into another land-use case, where this time the petitioners sued the right governmental body. Seymour v. Roanoke County Board involves a special use permit to operate a facility dedicated to a noble purpose – caring for injured animals. The facility is at the end of a private easement that runs across several residential properties. The owners sought the permit to build a new structure to house and rehabilitate injured birds of prey.
While reviewing the application, County planning officials discovered that several structures on the site were unpermitted. They told the applicant that those structures would need to be included in the permitting process. The County Board eventually granted the permit, including retroactively for the previous structures.
This permit engendered opposition from nearby landowners – specifically, those who owned property crossed by the easement, an unimproved road not maintained by any government. The neighbors here sued in circuit court, alleging that the existing and projected use of the easement greatly increased traffic, impaired their quiet enjoyment of their properties, and required them to expend money to maintain the easement – their only means of access to public roads. Two neighbors also objected that their children, who used the lane to get to school, had nearly been struck by speeding traffic on the way to the center.
The circuit court eventually sustained the applicant’s demurrer, ruling that the neighbors had failed to establish standing under the Friends of the Rappahannock doctrine from 2013. That analysis requires two components: proximity and an individualized harm, one not shared by the public generally.
On appeal, the Supreme Court today notes that no one doubts the neighbors’ proximity to the easement; it runs across their land. On the second prong, the justices part ways with the trial judge. They rule today that the kind of harms claimed here, viewed in a light most favorable to the neighbors, can establish harms not shared by members of the public. The court thus remands the case.
One portion of this opinion gave me pause. On pages 12-13, the court takes pains to distinguish its holding from the facts of Friends of the Rappahannock. In the earlier case, the court ruled that nearby landowners didn’t have standing to object to a proposed sand-and-gravel-mining operation, despite their complaints of impaired hunting rights, noise, air particulates, and increased traffic.
The Supreme Court finds those earlier claims distinguishable from today’s circumstances, but my reading of the case didn’t convince me of the distinctions. For example, here’s one offered today:
Significantly, Friends of the Rappahannock involved more speculative allegations of harm. The property owners in Friends of the Rappahannock asserted that the operation of the sand and gravel mine may result in the alleged forms of harm. In contrast, the appellants in the present case have alleged that they have already been harmed by the traffic on the easement
Okay, I understand that. But the court today then goes on – in the very next sentences of the opinion, no less – to acknowledge that “Generally, a plaintiff is not required to allege that it has already incurred ‘particularized’ harm in order to satisfy the second prong of the Friends of the Rappahannock test. The second prong of the Friends of the Rappahannock test requires an ‘allegation of injury or potential injury not shared by the general public.’” (Emphasis original in today’s slip opinion)
Now, I’m satisfied that today’s ruling is the correct one; these landowners should have a day in court. What this unconvincing distinction does convince me is that Friends of the Rappahannock may have been incorrectly decided. Today’s opinion doesn’t come right out and say that – the justices seldom outright overrule their previous holdings – but that’s the conclusion that I reach. I hasten to add that on the seven-member Supreme Court, I have zero votes.
