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Indianapolis prevails in US high court on sewer tax case; residents, attorneys stung

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Thirty-one Indianapolis property owners who paid as much as 30 times more than their neighbors for sewer service got resolution from the U.S. Supreme Court in their lawsuit against the city. They lost.

“It hurts,” said Christine Armour, who by virtue of the alphabet is the first and namesake plaintiff in Armour v. City of Indianapolis, No. 11-161. “It’s a total injustice. I just can’t see how they could make a judgment like that.”

The judgment was the U.S. Supreme Court’s 6-3 ruling in favor of Indianapolis, a ruling that upheld a divided Indiana Supreme Court.
 

il-waicukauski04-15col.jpg Attorney Ronald Waicukauski sits behind some of the files from an equal protection tax case that he represented. The case was decided June 4 by the U.S. Supreme Court. (IL Photo/ Perry Reichanadter)

The plaintiffs each paid the full $9,278 to have sewers installed in the Brisbane/Manning neighborhood in northwest Indianapolis. The city used Indiana’s Barrett Law to finance the sewer hookups, apportioning the cost equally among property owners, who could pay in full or in installments.

The suit arose when Indianapolis stopped using Barrett Law and forgave future payments. Those who paid in full wanted refunds; the city refused. Some property owners whose debt was forgiven had paid little more than $300.

Ronald J. Waicukauski, an attorney with Price Waicukauski & Riley in Indianapolis, sued the city on the property owners’ behalf under the federal Equal Protection Clause. He litigated the case until Washington, D.C., attorney Mark Stancil argued before the U.S. Supreme Court.

“I continue to believe that what the city did here was incredibly unfair and was bad public policy for the city, and I also believe that what the Supreme Court has done in refusing to overturn this incredibly unfair decision reflects in a negative way on the opportunity the courts have and will have in the future to correct injustices like this,” Waicukauski said.

But attorneys for the city said the court decided correctly on equal protection and giving deference to governmental lawmaking powers.

Finding for the city

The ruling represented an unusual coalition. Conservative Justice Clarence Thomas and frequent swing vote Justice Anthony Kennedy joined the traditionally liberal bloc of Justices Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor in an opinion written by Justice Stephen Breyer.

The majority agreed with the city that granting refunds would create an administrative hardship and that its decision to forgive Barrett Law payments met a key test.

“The City’s administrative concerns are sufficient to show a rational basis for its distinction. Petitioners propose other forgiveness systems that they argue are superior to the City’s system, but the Constitution only requires that the line actually drawn by the City be rational,” Breyer wrote.

“State law says nothing about forgiveness … To adopt petitioners’ view would risk transforming ordinary violations of ordinary state tax law into violations of the Federal Constitution,” the majority opinion said.

Indianapolis Chief Litigation Counsel Alexander Will said in an email, “We believe the Supreme Court’s opinion is simply an affirmation of existing equal protection jurisprudence. Otherwise, this case must be remanded for determination of the state claims, and the companion case is still pending in the U.S. District Court.”

Will said the city contracted and paid about $200,000 to the firm of high-powered Washington, D.C., attorney Paul Clement, who argued the city’s case before the justices.

“Without commenting on the pending litigation,” Will said, “the Supreme Court’s decision affirms … that administrative burdens and costs can be a rational basis for government decision making.”


rosenbaum-bill-mug.jpg Rosenbaum

The companion case Will refers to involves about 1,400 plaintiffs in a class action against the city seeking about $2.8 million in refunds. William Rosenbaum represents those clients in Owen & Evelyn Cox v. City of Indianapolis, et al., No. 1:09-CV-435. That suit includes property owners who paid varying amounts in numerous Barrett Law projects. The suit contests the city policy that forgave Barrett Law payments and also claims equal protection violations for those who paid more than others who received the same benefit.

Rosenbaum said the federal court had granted summary judgment in favor of the plaintiffs on the equal protection argument. “That obviously goes away as a result of the decision of the U.S. Supreme Court in the Armour case,” he said.

Cox v. Indianapolis remains before Judge Tanya Walton Pratt in the U.S. District Court for the Southern District of Indiana. A determination is pending on a request to reconsider dismissal of the portion of the case arguing violations of state Barrett Law.

Rosenbaum said the high court’s Armour ruling was disappointing. “It’s hard to imagine a set of facts that would come before the Supreme Court that would be a stronger call for the exercise of the Equal Protection Clause for individual taxpayers,” he said.


Jon Laramore Laramore

But Faegre Baker Daniels partner Jon Laramore said units of government also had much riding on the case.

Armour is a helpful decision for local governments,” Laramore said. “It specifically clarifies that administrative convenience will in most cases be sufficient to justify government programmatic decisions. That justification will not raise any equal protection problems.”

With Faegre partner Scott Chinn, Laramore wrote an amicus brief in support of the city on behalf of the International City/County Management Association, National Association of Counties, National Conference of State Legislatures, National League of Cities, and the United States Conference of Mayors.

Armour was a case of national interest because it seemed likely that the court would make law regarding how equal protection applies when there is a significant change in government policy,” he said. The decision probably puts to rest equal protection claims that could arise, for instance, when a government unit changes fee structures or sweeps streets more in one area than another.

Chief concerns

Chief Justice John G. Roberts, who wrote a sharp dissent joined by Justices Samuel Alito and Antonin Scalia, rejected such arguments.

“We have never before held that administrative burdens justify grossly disparate tax treatment of those the State has provided should be treated alike,” Roberts wrote. “Every generation or so a case comes along when this Court needs to say enough is enough, if the Equal Protection Clause is to retain any force in this context. … The equal protection violation is plain.”

Roberts also said the city’s actions failed the rational basis test.

“To the extent a ruling for petitioners would require issuing refunds to others who overpaid under the Barrett Law, I think the city workers are up to the task,” he wrote. “…What the city employees would need to do, therefore, is cut the checks and mail them out.”

Plaintiff Bill Main said the ruling was crushing to those expecting a different outcome based on the tenor of oral arguments.

“You had to take it, but it was hard to understand,” Main said. “The courts had a chance to correct what we thought was a gross injustice, and they didn’t do it.”

Despite the outcome, Waicukauski hopes the suit will discourage unfair treatment in the future by government entities.

“I think it’s important to understand that the Supreme Court didn’t say what the city did was right or fair,” he said. “They just said, ‘we’re not going to use the Equal Protection Clause to overturn the state Supreme Court.’”

Main drew a different lesson: “What I learned from it is that you never pay the city up front. I’ve learned to be very suspicious of the city.”•

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  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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