Voluntary
Payment Case Analysis
Jan.
1, 2007
The
case is a good candidate for review in the Supreme Court. The
court of appeals twice deferred considering the equities of the
case by remarking that any exception to the voluntary payment
doctrine must be created by that court.
Were
the court to grant review, however, and then affirm, it would
effectively preclude any public policy exceptions to the doctrine
in any case; if any case is going to present compelling reasons
for an exception, this is that case.
The
plaintiffs in Putnam v. Time Warner, 2002 WI 108, 225 Wis.2d 447,
649 N.W.2d 626, may have made a good case for an exception, but
not nearly as good as here.
In
Putnam, the court declined to create a public policy exception
for allegedly excessive late fees for cable TV service.
However,
a customer could easily have determined that the late fee charged
by the defendant was excessive, simply by comparing it to the
late fees charged by other utilities, such as the phone company.
The
telephone bill that a customer receives every month plainly states
that if it is not paid by a certain date, there will be a small
fee — less than a dollar. A customer could easily have inferred
from this that the five dollar late fee the cable company was
charging was an excessive liquidated damage charge.
In
the case at bar, on the other hand, nothing so obvious is present
to alert the customer that he is being illegally taxed. The customer
would have to examine sec. 77.51(21m) and determine what can be
taxed, divide each item in his phone into taxable and untaxable
categories, multiply the taxable items by five percent, notice
the sales tax on the bill is a few cents too high, and then figure
out which of the untaxable itemizations is being taxed.
Nobody
except an ambitious young attorney looking for a class action
to file would do such a thing.
Furthermore,
the facts are more egregious than in Putnam for another reason:
basic telephone service is a necessity, while cable TV is not.
The
court summarily found the case of Dreyfus v. Ameritech Mobile
Comm., Inc., 700 N.E.2d 162 (Ill.App.1998), inapplicable, without
undertaking a comparison of the two.
In
Dreyfus, the court held that cellular phone service is not a necessity,
and thus, it was not purchased under duress. Dreyfus, 700 N.E.2d
at 167. Admittedly, many young people consider a cell phone a
necessity, and a basic land line worthless.
Nevertheless,
most older people would consider the basic phone service to be
the necessity. In addition, this lawsuit wasn't filed yesterday;
it has been pending since 2001, and the purportedly unlawful sales
taxes go back to 1998. Back then, even more people considered
a land line a necessity.
Furthermore,
the court never seriously addressed the duress issue. In Putnam,
the plaintiffs had initially claimed that cable TV was a necessity,
and thus the duress exception applied. However, they wisely abandoned
this rather frivolous argument in the Supreme Court. Putnam, 649
N.W.2d at 633, fn. 5.
In
the case at bar, there is a legitimate necessity/duress argument
to be made, that is not controlled by Putnam. Nevertheless, the
court avoids the issue with one sentence: “The supreme court
in Putnam declined to adopt exceptions beyond fraud, duress, or
mistake of fact, and it specifically referred to the elements
of duress.”
Given
the abandonment of the duress argument by the plaintiffs in Putnam,
however, Putnam is not controlling as to the duress issue. The
court in the case at bar could have found duress to be present,
without creating any new exceptions to the doctrine beyond those
few the Supreme Court has already recognized.
Finally,
a cable TV customer knows that, if payment is late, the $5 fee
will be assessed, even if he doesn't know it is excessive. In
contrast, the telephone user has no knowledge he is being unlawfully
taxed at all, without going through the lengthy procedure described
above.
The
decision in Putnam was recently distinguished by a federal court
in Minnesota on this basis. Auto-Chlor System of Minnesota, Inc.,
v. JohnsonDiversey, 328 F.Supp.2d 980, 1011-12 (D.Minn.2004).
The plaintiffs in that case, unlike the plaintiffs in Putnam,
did not know in advance what they would be charged if they breached
the contract. Accordingly, the court held the voluntary payment
doctrine inapplicable.
As
in Auto-Chlor, the plaintiffs here have no knowledge of the facts
underlying the amount they are billed by the telephone company,
and Putnam could be distinguished for that reason.
For
all these reasons, if the Supreme Court were to accept review,
and nevertheless affirm, the voluntary payment doctrine is all
but ironclad. If this case doesn’t warrant an exception,
no other case will.
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David
Ziemer can be reached by email.
