author:
Robert H. Dudley, Justice.
      Tom Glaze, Justice. Robert H. Dudley, Justice.

text:
    Larry CRUTCHFIELD v. STATE of Arkansas
    CR 91-35
    812 S.W.2d 459
    Supreme Court of Arkansas
    Opinion delivered June 24, 1991
    [Supplemental Opinion on Denial of Rehearing October 14, 1991.]

      William R. Simpson, Jr., Public Defender, by: Brett Qualls, Dept’y Public Defender, for appellant.

      Winston Bryant, Att’y Gen., by: Pamela Rumpz, Asst. A’tty Gen., for appellee.

       Dudley, J., would grant rehearing.

   Robert H. Dudley, Justice.

The appellant was charged with, and convicted of, aggravated robbery and possession of drug paraphernalia. We affirm the conviction for aggravated robbery, but reverse and dismiss the conviction for possession of drug paraphernalia.

1. Aggravated robbery

At about 2:30 a.m. on the night of May 26, 1990, Steven Barnes’ car ran out of gas near the intersection of 23rd and Izard Streets in Little Rock. He knew there was a gas station at a nearby intersection, so he walked there, only to discover that it was closed. Outside the station he saw some men standing beside a blue sports car. He walked over to them and asked if they would take him to get some gas. One of the men was the appellant. As Barnes was talking to the appellant, another of the men, known as Bullwinkle, slipped up behind Barnes and began beating him on the head with a large pistol. Barnes tried to run away, but appellant and Bullwinkle chased him about half a block and caught him. Bullwinkle again started pistolwhipping him and ordered the appellant to grab his wallet. The appellant grabbed Barnes’ wallet, and he and Bullwinkle ran to the corner of 26th and Arch where the blue sports car was waiting. They got in the car and drove away.

Appellant was convicted of a violation of Ark. Code Ann. §5-12-103(a)(l) (1987), which provides:

A person commits aggravated robbery if he commits robbery as defined in § 5-12-102, and he: (1) Is armed with a deadly weapon or represents by word or conduct that he is so armed; ....
Ark. Code Ann. § 5-12-102 (1987) provides, in part:
A person commits robbery if, with the purpose of committing . . . a theft. . ., he employs or threatens to immediately employ physical force upon another.

(Emphasis added.)

Appellant first argues that the proof was not sufficient to show his intent to commit a theft because he only acted on Bullwinkle’s command. The argument is without merit. The evidence does not show that appellant protested when Bullwinkle began to beat Barnes, instead he joined in the affray by chasing Barnes when he tried to run away. He took Barnes’ wallet and fled the scene of his own volition. Taking the wallet and running away with it are strong evidence that he intended to deprive Barnes of his property. Depriving another of his property is the essence of theft. See Ark. Code Ann. § 5-36-103 (1987).

Appellant next contends that there was no evidence that he used physical force on another person. Barnes testified that “they caught me. They kept beating me in the head with a pistol.” Appellant argues that “they” is not substantial evidence that he was involved in the beating because there were at least three people present when the victim first approached the group of men to ask for a ride. We reject the argument because Barnes testified that “the both of them started chasing me,” and that after they caught him, “the other guy with the pistol ordered that guy right there [appellant] to take my wallet out of my pocket.” It is clear that “both” referred to appellant and Bullwinkle. The jury did not have to resort to conjecture to establish that appellant participated in using physical force against the victim, Barnes.

Appellant also contends that there was no evidence introduced to show that he was armed with a weapon. We reject this contention since the evidence established that appellant’s companion was armed with a pistol and beat Barnes in the head with it. Although appellant never actually possessed the gun, he was liable as an accomplice because he assisted and actively participated in the crime.

Ark. Code Ann. § 5-2-403(a)(2) (1987) provides:
A person is an accomplice of another person in the commission of an offense if, with the purpose of promoting or facilitating the commission of an offense, he:
(2) Aids, agrees to aid, or attempts to aid the other person in planning or committing it.

When two persons assist one another in the commission of a crime, each is an accomplice and criminally liable for the conduct of both. A participant cannot disclaim responsibility because he did not personally take part in every act that went to make up the crime as a whole. Parker v. State, 265 Ark. 315, 325, 578 S.W.2d 206, 212 (1979).

Here, appellant and Bullwinkle chased and caught Barnes. Bullwinkle was beating Barnes when the appellant took Barnes’ wallet, and then appellant fled with Bullwinkle. The jury could reasonably infer that appellant and Bullwinkle were acting together. Further, fleeing from the scene of the crime is relevant to the issue of guilt. Jones v. State, 282 Ark. 56, 665 S.W.2d 876 (1984). Therefore, there is substantial evidence to support appellant’s conviction for aggravated robbery, and that conviction is affirmed.

2. Possession of drug paraphernalia

At the time of appellant’s arrest, the officer performed a pat-down search and, in appellant’s right front trouser pocket, found a small piece of chrome plated metal tubing that appeared to be a three or four inch piece of automobile radio antenna. Inside the tube was a “piece of screen or mesh, wire-type mesh, or metal material of some kind.” The outside appeared to have been burned or heated.

Immediately before trial, appellant’s attorney made a motion asking that the State’s witnesses not be allowed to refer to the piece of antenna as a “crack pipe.” The trial judge granted the motion. In addition, the appellant moved that the State be precluded from showing that pieces of antenna are commonly used as drug paraphernalia. The trial court also granted that motion. Immediately afterward, the following colloquy occurred:

MS. BALL: [Deputy Prosecutor] Okay, I’ll just tell you what I was planning on asking. If you don’t want me to, I won’t ask it. He is a patrolman. He knows about what devices are used, just through his everyday work, to smoke for ingesting cocaine. I was going to ask him if he had an opinion as to what this was used for and what was the basis for his opinion, and then he would talk about-all the arrests he has made with devices such as this and what it is used for and if he has gone to seminars, etcetera.
THE COURT: I don’t think we need that for this case.

Appellant argues that the evidence is insufficient to support a conviction for possession of drug paraphernalia. The argument is well taken. Appellant was charged with violating Ark. Code Ann. § 5-64-403(c)(l) (1987) which provides:

It is unlawful for any person to use, or to possess with intent to use, drug paraphernalia, to plant, propagate, cultivate, grow, harvest, manufacture, compound, convert, produce, process, prepare, test, analyze, pack, repack, store, contain, conceal, inject, ingest, inhale, or otherwise introduce into the human body a controlled substance in violation of subchapters 1-6 of this chapter. Any person who violates this section is guilty of a Class C felony.

(Emphasis added.)

In short, the statute provides that it is a crime to use, or to possess with intent to use, drug paraphernalia to inhale or ingest drugs. The State argues that the chrome tube is drug paraphernalia by statutory definition. Ark. Code Ann. § 5-64-101 (v) (Supp. 1989) defines drug paraphernalia and contains a partial list of included items, as well as fourteen (14) factors to be considered in determining whether an object is drug paraphernalia. Subsection 12(A) provides:

Objects used, intended for use, or designed for use in ingesting, inhaling, or otherwise introducing marijuana, cocaine, hashish, or hashish oil into the human body, such as:
(A) Metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls; . . .

Ark. Code Ann. § 5-64-101 (v)(12)(A) (Supp. 1989).

It would amount to sheer speculation to hold that this piece of antenna was possessed for drug use without some testimony that such a tube is often used for inhaling drugs. However, we need not dwell on the issue because, even if it fits the statutory description of drug paraphernalia, the State must prove that appellant used or possessed it with intent to introduce a controlled substance into the human body. The State’s proof falls short on that element. No proof was offered to show that there was a residue of a controlled substance inside or outside the tube; in fact, the tube was not tested for drug residue. No drugs were found on appellant or in his residence, and he was not linked in any way to drug use. Without something more to connect the piece of car antenna to controlled substances, the jury had to speculate to conclude that the appellant intended to use it for the prohibited purpose.

In determining whether there is sufficient evidence to support a jury verdict, this court views the evidence in the light most favorable to the appellee and affirms the verdict if there is substantial evidence to support it. Substantial evidence is that which is of sufficient force to compel a conclusion one way or another. It must be more than mere speculation or conjecture. Cerda v. State, 303 Ark. 241, 795 S.W.2d 358 (1990). Because the jury had to speculate that appellant possessed the piece of chrome tube with an intent to use it to inhale controlled substances, the evidence is not sufficient to support the conviction for possession of drug paraphernalia and that conviction must be reversed.

The State asks that we not consider the appellant’s insufficiency argument because, it contends, the appellant did not specifically argue, in his motion for a directed verdict, that the tube was not covered under the statute. We reject the contention because (1) the appellant’s attorney referred by number to the specific statute involved and (2) discussed at length the intent issue.

Next, the State tacitly admits that it did not prove that the tube was used or intended to be used as drug paraphernalia, but argues that the trial court’s erroneous ruling caused the failure of proof and that “the sufficiency of the State’s proof of appellant’s guilt should be evaluated on the basis of the evidence the State proffered to the trial court, not on the basis of the evidence the trial court actually admitted” and that “the State should not be denied a conviction because admissible evidence was excluded.”

Initially, we note the trial court did err in its ruling against the State. Ark. Code Ann. § 5-64-101 (Supp. 1989) provides:

In determining whether an object is drug paraphernalia, a court or other authority should consider, in addition to all other logically relevant factors, the following:
(14) Expert testimony concerning its use ....
Further, A.R.E. Rule 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact of issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.

816 S.W.2d 884

SUPPLEMENTAL OPINION ON REHEARING OCTOBER 14, 1991

Winston Bryant, Att’y Gen., by: Pamela Rumpz, Asst. Att’y Gen., for petitioner.

William R. Simpson, Jr., Public Defender, Omar F. Greene II, Deputy Public Defender, by: Bret Qualls, Deputy Public Defender, for respondent.

However, such an evidentiary error by the trial court does not mean that a jury conviction can be affirmed on appeal by the appellate court’s consideration of matters which the jury did not hear. Our Court of Appeals has expressly held that such evidence may not be considered. Ryan v. State, 30 Ark. App. 196, 786 S.W.2d 835 (1990). We agree with the reasoning of that case.

The State cites the case of Webster v. Duckworth, 767 F.2d 1206 (7th Cir. 1985) as authority for the proposition that, upon trial court evidentiary error, evidence proffered by the State may be considered by an appellate court to affirm a conviction. We do not so read the case.

The conviction for aggravated robbery is affirmed; the conviction for possession of drug paraphernalia is reversed and dismissed.

Tom Glaze, Justice.

In its petition for rehearing, the state disagrees with that part of our original opinion that reverses and dismisses this case. Instead, it suggests we should reverse and remand for retrial on the charge of possession of drug paraphernalia. We agree.

In our earlier opinion, we agreed with the state that the trial court erred in excluding the state’s proffered expert testimony indicating the chrome metal tubing with wire-type mesh possessed by appellant was drug paraphernalia. We further said that such evidentiary error by the trial court did not mean that a jury conviction can be affirmed on appeal by our consideration of matters which the jury did not hear. Of course, we were correct in this observation. However, we further cited and relied on language in Webster v. Duckworth, 767 F.2d 1206 (7th Cir. 1985), wherein that court stated that where a trial court erroneously excludes prosecution evidence, retrial is barred. The Webster court then mistakenly summarized the rule to be that a defendant could not be retried after his conviction was reversed due to the state’s failure to produce evidence sufficient to sustain a verdict of guilty beyond a reasonable doubt and that the insufficiency of the evidence, whether or not caused by an erroneous trial court ruling, was the constitutional equivalent of an acquittal.

The Webster court later amended its opinion deleting the language summarized above. In doing so, the court acknowledged that, under Burks v. United States, 437 U.S. 1 (1978), a defendant may be retried when the government offered sufficient evidence only to have the court erroneously exclude an essential portion. Webster, 767 F.2d at 1215. Stated in other terms, the Burks rule is that the double jeopardy clause prohibits retrial when a conviction is reversed for insufficient evidence as opposed to trial error. Burks, 437 U.S. at 14.

In the present case, insufficiency of the evidence does not exist. Instead, the state offered expert evidence, erroneously excluded by the trial court, which bore on the issue of whether the chrome tube found on Crutchfield was drug paraphernalia and therefore intended for use to inhale controlled substances. Even though the trial court excluded such evidence, it still permitted the possession of drug paraphernalia charge to go to the jury which returned a conviction on the charge. In other words, the trial court never entered an acquittal because of its erroneous ruling nor did the jury acquit Crutchfield because the evidence was excluded. Thus, this case is unlike the case of Sanabria v. United States, 437 U.S. 54 (1977), upon which the dissenting opinion relies. See also United States v. Jenkins, 420 U.S. 358 (1975).

In sum, with the above expert testimony, the trial evidence was sufficient to support Crutchfield’s conviction for possession of drug paraphernalia. See Lockhart v. Nelson, 488 U.S. 33, 41 (1988); Palmer v. Grammer, 863 F.2d 588 (8th Cir. 1988); cf. Rogers v. State, 293 Ark. 414, 738 S.W.2d 412 (1987); see also Westen & Drubel, Toward a General Theory of Double Jeopardy, 1978 Sup. Ct. Rev. 81,147 (1979). Under the Burks rationale, the state is entitled to present its proof. Thus, we reverse and remand this case for retrial on the charge of possession of drug paraphernalia. In all other respects, our earlier opinion is reconfirmed.

Dudley, J., dissents.

Robert H. Dudley, Justice.

In our original opinion we held that the trial court had erroneously excluded a part of the State’s evidence. As a result, the State was not able to prove one of the elements of the crime but, even so, the jury returned a verdict of guilty. On appeal, we reversed because of the insufficient evidence concerning the missing element.

We dismissed the charge since the reversal was based upon insufficiency of the evidence. On rehearing, the State asks that we remand rather than dismiss. The majority today grants rehearing to change the disposition of the case to remand. I dissent.

On June 14, 1978, the Supreme Court of the United States decided three (3) cases which made clear its interpretation of the Double Jeopardy Clause of the Fifth Amendment. That trilogy of cases provide that when a criminal case is reversed solely because of trial error, retrial is not prohibited, but when a case is reversed because of insufficiency of evidence, retrial is prohibited.

The first of the three (3) cases is Burks v. United States, 437 U.S. 1 (1978). The unanimous opinion of the Court reasoned that an appellate court’s determination of insufficient evidence is tantamount to holding that the trial court should have directed a verdict of acquittal. Had the trial court done so, there could be no retrial. The mere fact that the appellate court is the one to declare the insufficiency of the evidence is irrelevant. A determination of some court has been made that the evidence was insufficient. After that determination, no retrial is permissible. Id. at 16.The key fact is the acquittal, and it matters not whether it is granted at the trial level or the appellate level.

The second case, Greene v. Massey, 437 U.S. 19 (1978), applied the Burks decision, a federal decision, to state proceedings. The question in this case was whether a state could retry a defendant whose case was reversed by a state appellate court because of the insufficiency of the evidence. The Supreme Court held that since the original reversal had been based on the “view that the evidence was definitely lacking in establishing beyond a reasonable doubt that the defendants committed murder in the. first degree,” double jeopardy barred retrial. Greene v. Massey, 437 U.S. at 25.

The third case decided that same day was Sanabria v. United States, 437 U.S. 54 (1978). In it, the Court held that even when an erroneous exclusion of evidence causes the insufficiency of evidence, retrial was barred. The court wrote: “[Tjhere is no exception permitting retrial once the defendant has been acquitted, no matter how ‘egregiously erroneous’ the legal rulings leading to that judgment might be. ’’ Id. at 75 (Citation omitted. Emphasis added.)

In 1981, the Burks decision was affirmed in Hudson v. Louisiana, 450 U.S. 40 (1981). In 1982, the Court reiterated that the Burks doctrine applied to reversals based on insufficiency of the evidence, but explained that it did not apply to a reversal based upon the weight of the evidence. Tibbs v. Florida, 457 U.S. 31 (1982). (The Tibbs case arose in Florida which has a rule directing the State Supreme Court to “review the evidence to determine if the interests of justice require a new trial, whether the insufficiency of the evidence is a ground of appeal or not.” Id. at 46. Tibbs’ reversal “rested upon a finding that the conviction was against the weight of the evidence, not upon a holding that the evidence was legally insufficient to support the verdict.” Id. at 47.)

Professors Singer and Hartman have accurately summarized the law on this point as follows:

Effect of Reversal on Appeal. When the defendant’s case is reversed on appeal, retrial is barred by the rule against double jeopardy if the reversal is based upon insufficiency of the evidence. If it is based upon procedural error at the trial, retrial is not prohibited. This principle is applicable in both state and federal proceedings. However, if the reversal is based upon the weight of the evidence as opposed to the insufficiency of the evidence, retrial is not barred.

S. Singer & M.J. Hartman, Constitutional Criminal Procedure Handbook, § 16.23, at 590 (1986). In short, retrial is barred in the case at bar, since the reversal was for insufficient evidence.

In contrast to the bright line drawn by the Supreme Court of the United States, the majority opinion cited dictum from 7th Circuit’s case of Webster v. Duckworth, 767 F.2d 1206 (1985). Even that dictum would not mandate reversal and, more importantly, the holding of the case does not support the majority opinion. Accordingly, I would not grant rehearing and dissent to the majority’s so doing.


source: Caselaw Access Project

author: Robert H. Dudley, Justice.

license: Public Domain

text:
    FIRST ELECTRIC COOPERATIVE CORPORATION v. Mark S. and Suzanne CHARETTE
    91-46
    810 S.W.2d 500
    Supreme Court of Arkansas
    Opinion delivered June 24, 1991

      James C. Baker, Jr., for appellant.

      Charles Phillip Boyd, Jr., for appellees.
   Robert H. Dudley, Justice.

Plaintiffs, Mark and Suzanne Charette, bought a three-acre wooded corner lot in a subdivision in Saline County. For the next year and a half, they removed pine trees and cleared undergrowth and damaged hardwood so that the healthy hardwood would grow. They plan to build a lake on the southern part of their lot and to build their home on the northern part of it. They left a grove of the best hardwood trees along the road on the west side of their property so that they could have a tree-lined drive beside their home. Unfortunately, First Electric Cooperative Corporation made a mistake about the location of its easement and cut down twenty-one (21) of plaintiffs trees along the road.

The plaintiffs sued First Electric for its destruction of the hardwood trees. They prayed for the replacement value of the destroyed trees and for treble damages for intentional destruction of the trees pursuant to Ark. Code Ann. § 18-60-102 (1987). At trial, the jury heard evidence of the cost of replacing the trees, as well as evidence of the fair market value of the land before and after the removal of the trees. At the close of all the evidence, and over the objection of First Electric, the trial judge instructed the jury that if it found for the plaintiffs, it should determine the amount of money which would compensate the plaintiffs for the reasonable expense of necessary repairs to the damaged property. The jury found that First Electric was negligent in cutting down the trees, but that it had not intentionally destroyed them, and it awarded plaintiff recovery in the amount of $8,300.00. The trial court entered judgment in that amount. We affirm.

Appellant First Electric argues that allowing the replacement measure of damages can result in an unfair recovery to the trespasser when, as in the present case, the evidence shows that the cost of replacing trees is almost as much as the value of the land. Plaintiff Mark Charette testified that he and his wife, Suzanne, purchased the land in the spring of 1987 for $13,900.00 and that the land was worth $24,000.00 in the fall of 1989, before appellant cut the trees along the road. On the other hand, First Electric’s expert, a real estate appraiser, testified that the fair market value of the land was only $ 14,000.00 before the appellant cut down the twenty-one (21) trees and that the land was worth more after the trees were cut. Plaintiffs’ expert, a nurseryman, testified that it would cost $16,555.00 to replace the trees.

In the recent case of Worthington v. Roberts, 304 Ark. 551, 803 S.W.2d 906 (1991), we adopted the rule that when ornamental or shade trees are injured, the use made of the land should be considered and the owner compensated by damages representing the cost of replacement of the trees. We also said that the evidence in each case will determine whether an instruction on the difference in the value of the land before and after an occurrence (AMI 2222) or one on the cost of restoration (AMI 2223) should be given.

In the present case, the evidence showed that the appellant had destroyed a relatively small number of hardwood trees. The plaintiffs had intentionally left these trees growing along the roadside because they wanted a beautiful tree-lined road by their home. In effect, the trees that First Electric destroyed were part of the landscaping the plaintiffs had undertaken in preparation for building their house. Under these facts, we cannot say that the trial court abused its discretion in instructing the jury on the replacement measure of damages. Certainly we can envision fact situations in which recovery of the replacement cost of trees would yield a result grossly disproportionate to the fair market value of the land and would, therefore, be an inappropriate measure of damages, but this is not such a case.

First Electric secondly argues that the replacement measure of damages was improper in the present case because the plaintiffs had not yet put the land to their intended use for it by building their house or lake. This argument has no merit. In another recent case, Revels v. Knighton, 305 Ark. 109, 805 S.W.2d 649 (1991), we held that it is proper for a trial court to consider the intended use of property when determining the appropriate measure of damages. In that case, we allowed replacement value damages for shade trees on property which the appellees intended to use as a trailer park.

Affirmed.


author: Steele Hays, Justice.

text:
    Jo DODSON v. David DICKER
    91-7
    812 S.W.2d 97
    Supreme Court of Arkansas
    Opinion delivered June 24, 1991

      Mashburn & Taylor, by: W.H. Taylor and Lindlee Baker, for appellant.

      Harry McDermott, for appellee.
   Steele Hays, Justice.

This is a defamation and invasion of privacy action arising from a letter written by the appellant, Ms. Jo Dodson, on October 18, 1988, to the State Board of Therapy Technology, with copies sent to the Governor, Attorney General, a reporter and several others.

Ms. Dodson’s letter focused on the actions of the president of the State Board of Therapy Technology, Marinetta Dicker, and also included references to her husband, appellee David Dicker. The letter asserted, among other things, that David Dicker assisted Marinetta Dicker in rewriting the test for licensing of therapy technicians, which may have been done for profit; the Dickers drafted the budget for the board without the approval of other board members; the Dickers drew up a proposed license law for presentation to the Arkansas legislature without the approval of the board; and, David Dicker has imposed himself as the sixth member of the board. Dodson also stated that, in her opinion, the board had slandered a fellow therapist, Steve Schechter, and David Dicker’s letter to the Rolf Institute was a good example of it; and she wrote “he [Dicker] has such a ‘hate’ for Steve, and to be fair, Steve does not have any great love for him either, and in fact neither do I. I hate a bully . . . especially a sneaky bully, which is what he appears to be in my opinion.”

David Dicker filed suit against Ms. Jo Dodson in Washington County Circuit Court. After a jury trial on June 7, 1990, a verdict was returned in favor of Dicker and he was awarded $7,000 in actual damages and $5,000 in punitive damages.

Dicker offered two alternative theories to the jury, namely, invasion of privacy and libel, specifically, libel per se. Both causes of action may be joined in the same suit, nevertheless, there can be only one recovery for any particular publication. Dodrill v. Arkansas Democrat Co., 265 Ark. 628, 590 S.W.2d 840 (1979). Ms. Dodson insists that her directed verdict motion should have been granted on both the invasion of privacy and libel theories and we agree.

I.

The Libel Claim

First, we consider Dicker’s libel action. In doing so we note that in cases raising First Amendment issues the United States Supreme Court has repeatedly held that an appellate court “has an obligation to ‘make an independent examination of the whole record’ in order to make sure that ‘the judgment does not constitute a forbidden intrusion on the field of free expression.’ ” Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 499 (1984) (quoting New York Times Co. v. Sullivan, 376 U.S., at 284-286.) See also NAACP v. Claiborne Hardware Co., 458 U.S. 886, 933-934 (1982); Greenbelt Cooperative Publishing Assn. v. Bresler, 398 U.S. 6, 11 (1970); St. Amant v. Thompson, 390 U.S. 727, 732-733 (1968). We have exercised independent judgment on this issue and conclude that a finding of libel would constitute a forbidden intrusion on free expression because the words involved are not capable of sustaining a defamatory meaning.

In Milkovich v. Lorain Journal Co.,_U.S._, 110 S.Ct. 2695 (1990), the Supreme Court established that the threshold question in defamation actions is not whether a statement could be considered an “opinion” but rather whether a reasonable factfinder could conclude that the statement implies an assertion of an objective verifiable act. Id. at 2707; See generally, Note, Freedom of Speech - No Separate "Opinion” Privilege in Defamation Actions, 13 U.A.L.R. L.J. 517 (1991). The holding in Milkovich was recently applied in Unelko Corp. v. Rooney, 912 F.2d 1049 (9th Cir. 1990). In order to determine whether a statement could be viewed as implying an assertion of fact, the Ninth Circuit set forth three factors to be weighed: (1) whether the author used figurative or hyperbolic language that would negate the impression that s(he) was seriously maintaining implied fact; (2) whether the general tenor of the publication negates this impression; and (3) whether the published assertion is susceptible of being proved true or false. Id. at 1053. We think the Ninth Circuit’s method of analysis is a reasonable extension of the Milkovich doctrine, therefore, our examination of Dodson’s statements follow the Rooney considerations. As this court enters an area of defamation law where we have not previously ventured, we caution that every set of circumstances subsequently considered under this analysis must be examined on a case-by-case basis.

In this case it is not necessary to discuss Dodson’s statements under each category because evidence supporting the second category—the tenor, or general drift of thought of Dodson’s letter—completely negates any impression that Dodson’s statements were presented as an assertion of objective facts about David Dicker. This letter was about Dodson’s protestation of the actions'of a state board and her views on what she perceived to be Mr. Dicker’s interference with its operations. It is most significant that the board’s own policy required that all requests and concerns addressed to it by therapists be submitted in writing. That is precisely what Dodson was doing. Her letter was expressed in terms of her “opinion” and “protest.” It criticized not only Dicker, but also his wife who was president of the state board and the state board itself. In fact, her letter opens with the following statement, “I do hereby formally and strongly protest the actions of the President of the State Board of Therapy Technology, Marinetta Dicker.” Dodson, as a massage therapist, had a substantial interest in the conduct of the State Board of Therapy Technology and her freedom to engage in uninhibited debate over its actions is both legitimate and desirable. The fact that she referred to David Dicker with intemperate language does not convince us that the statements, in their totality, were the type of assertions of objective facts about Mr. Dicker that give rise to liability in a defamation action. Dodson’s statements do not meet the threshold requirement for a defamation action thus, the trial court erred in denying a directed verdict on the libel theory.

II.

The Invasion of Privacy Claim

Next, we consider the denial of Ms. Dodson’s motion for a directed verdict on the issue of invasion of privacy. Dodson argued that David Dicker did not present sufficient proof of malice to produce a submissible issue for the jury.

This court applies certain standards when reviewing the denial of a directed verdict. A motion for directed verdict should only be granted if the evidence is so insubstantial as to require a jury verdict to be set aside. Bice v. Hartford Acc. & Indem. Co., 300 Ark. 122, 777 S.W.2d 213 (1989). In determining the propriety of the trial court’s action concerning a motion for directed verdict, the evidence is given its highest probative value and viewed in a light most favorable to the party against whom the verdict is sought. Id.

The right to recover for an invasion of privacy requires the plaintiff to demonstrate:

(1) the false light in which he was placed by the publicity would be highly offensive to a reasonable person, and (2) that the defendant had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the plaintiff would be placed. RESTATEMENT (SECOND) OF TORTS, § 652 E. (1977).

Dodrill v. Arkansas Democrat Co., 265 Ark. 628, 590 S.W.2d 840 (1979).

In Dodrill we made it clear that, where the plaintiff is not a public figure and the publication is of matters of general or public concern the plaintiff must prove actual malice by clear and convincing evidence. The question, then, presented under this section is whether Mr. Dicker prevailed on his burden of establishing actual malice as part of his prima facie case of invasion of privacy.

Statements made with actual malice are those made with knowledge that the statements were false or with reckless disregard of whether they were false or not. New York Times Co. v. Sullivan 376 U.S. 254, 279-280 (1964). The constitutional definition of malice is concerned with showing the author’s subjective disregard for accuracy of his statements. The Supreme Court emphasized the subjective nature of the inquiry when it commented that the actual-malice determination in the case before it “rests entirely on an evaluation of [the author’s] state of mind when he wrote his initial report, or when he checked the article against that report.” Bose, supra at 494. See also R. Smolla, Law of Defamation § 3.13 - 3.15 (1991). And in St. Amant v. Thompson, 390 U.S. 727, 731 (1968) the United States Supreme Court stated:

[R]eckless conduct is not measured by whether a reasonably prudent man would have published, or would have investigated before publishing. There must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication. Publishing with such doubts shows reckless disregard for truth or falsity and demonstrates actual malice.

Additionally, we have recognized that a failure to investigate does not in itself establish the bad faith inherent in malice. Gallman v. Carnes, 254 Ark. 987, 497 S.W.2d 47 (1973).

With these principles in mind, we cannot say that David Dicker proved actual malice with clear and convincing evidence. There was no evidence that Dodson entertained actual doubts as to the accuracy of her statements. Even though Dodson was unable to back up her allegations with proof, the majority of her comments were not completely without basis. Dodson testified, and Marinetta Dicker substantiated her testimony, that Mrs. Dicker had said publicly that she was rewriting the test for therapy technicians. The board’s secretary and treasurer testified that several therapists and massage therapy school owners thought that David and Marinetta Dicker wrote the test. Gordon Bradford, a licensed massage therapist testified that Mr. Dicker’s comments indicated that Dicker and his wife planned to formulate a new law to submit to the legislature. Ms. Dodson explained that her comment about the budget was based on Marinetta Dicker’s comment at a board meeting where she said, “we have ' drawn up the budget and it has been approved.” The appellee makes much of Dodson’s statement, that in her opinion Steve Schechter had been slandered by board members and Mr. Dicker’s letter to the Rolf Institute was a good example, because a letter was actually written by the Rolf Institute. However, Dodson admitted that was an error and testified that it was actually a telephone call that David Dicker made to the Rolf Institute.

The statements made in Dodson’s letter, we believe, reflect the inevitable inaccuracies that accompany debates on controversial issues innate in the public arena, and especially in a governmental board such as the one in this case. A subjective inquiry into Dodson’s state of mind when she wrote the letter reveals that she was motivated by dissatisfaction with the board’s operations. While it is conceded that our “society has a pervasive and strong interest in preventing and redressing attacks upon reputation” that interest must be weighed against protecting our First Amendment’s “vital guarantee” of free and open discussion of public issues. Milkovich at 2707. In this case, our First Amendment guarantee of free speech necessarily prevails.

Reversed and dismissed.

Corbin, J., concurs.

       There were other issues raised in Ms. Dodson’s letter that did not concern the appellee, David Dicker, however, the letter in its entirety is too long to reprint for this opinion.

       It is noteworthy that Ms. Dodson was subsequently appointed to the board by the Governor, nominated for board president by'Marinetta Dicker and elected to that position by board members.

       Because we dispose of the invasion of privacy/false light claim under this analysis we need not decide whether the actual malice standard, which is carried over from defamation actions, could be examined under the Milkovich/'Rooney balancing test.


author: David Newbern, Justice. Robert L. Brown, Justice, Steele Hays, Justice,

text:
    Charles and Wilma SUMMONS, Individually and as Next Friends of Kellen and Tanya Summons v. MISSOURI PACIFIC RAILROAD and Union Carbide Corporation
    90-230
    813 S.W.2d 240
    Supreme Court of Arkansas
    Opinion delivered June 24, 1991
    [Rehearing denied September 16, 1991.]

      Youngdahl, Trotter, McGowan & Farris, by: Jay Thomas Youngdahl, McHenry, Choate & Hartsfield, by: Robert M. McHenry and Green Law Offices, by: Brent Baber, for appellants.

      Herschel H. Friday and Frederick S. Ursery, for appellee Missouri Pacific Railroad.

      Wright, Lindsey & Jennings, by: Gordon S. Rather, Jr. and Clifton M. Smart III, for appellee Union Carbide.
   David Newbern, Justice.

This is an interlocutory appeal of a circuit court’s refusal to certify a class action. The appellants are Charles and Wilma Summons who brought the action on behalf of themselves and their children, Kellen and Tanya Summons. They seek to represent a class of several thousand persons who were evacuated from their homes or businesses as the result of a railroad accident in which a chemical tank car overturned in North Little Rock. The appellees are Missouri Pacific Railroad (MOPAC), which operated the train, and Union Carbide Corporation, the shipper of the chemical. We agree with the Summonses’ argument that the Trial Court abused its discretion in refusing to certify the class, and thus the decision is reversed and remanded.

The accident occurred mid-morning on July 8, 1987. A liquid substance was observed to be leaking from the overturned car which was carrying ethylene oxide, an allegedly highly volatile and toxic chemical. The evacuation began with an order by local emergency services personnel at approximately 10:40 a.m. The order was lifted at approximately 4:15 p.m. when it was determined that the liquid leaking from the car was not ethylene oxide, but a non-hazardous refrigerant which was part of the overturned car’s container system.

The Summonses alleged that they and others who were evacuated were frightened, their lives were disrupted, they were forced to spend money for food, clothing, and shelter, and that they suffered pain and mental anguish. They alleged that some persons were forced to seek medical treatment. They contended that MOPAC and Union Carbide were wilfully and wantonly negligent, and they asserted a strict liability claim based on shipment of an ultra-hazardous product.

The complaint stated that the class the Summonses sought to represent consisted of about 5,000 persons, that joinder of so many claims would be impractical, that there were questions of law and fact common to the claims, and that the interests of the class outweighed those of individual members. It was also alleged that the Summonses’ claim was typical of members of the class, they had obtained competent counsel, they were aware of their responsibilities as members of the class, and a class action was the superior method of deciding the claims of the class members.

In its answer, MOPAC denied negligence, denied that the transportation of ethylene oxide was an ultra-hazardous activity giving rise to strict liability, and denied all of the allegations supporting the certification of the class. Union Carbide filed a similar answer, adding that the injuries claimed were the result of actions of parties over whom Union Carbide had no control or were the result of intervening causes.

A hearing was held on the Summonses’ motion to certify the class. Janet Jones, an employee of McHenry Law Firm, testified that she compiled a list of persons claiming damages as a result of the evacuation. The list numbered 5,321 persons, many of them living in the Eastgate Terrace, Shorter Gardens, and Dixie Addition sections of North Little Rock. On cross-examination Ms. Jones testified about the differences in the claims. She said some were for motel and meal expenses, and some were for loss of work because, for example, of inability of claimants to return to their homes to obtain uniforms to wear. Also, on cross-examination, Ms. Jones pointed out that she had no first-hand knowledge that anyone from MOPAC or Union Carbide assisted the North Little Rock police in the evacuation procedure.

Testimony was also taken from potential class members about the general effect of the evacuation upon their lives on the day in question.

The operative portion of the Court’s order was as follows:

1. A class action proceeding would result in indeterminate and chaotic litigation and would cause judicial extravagance rather than judicial economy.
2. A class action would be an inappropriate method of dealing with the proposed claims.
3. This action should not be maintained as a class action because the prerequisites of Rule 23 . . . have not been satisfied. ...

1. Rule 23 requirements

At the time the decision was made, Rule 23(a) contained the “prerequisites” to a class action as follows: “Where the question is one of a common or general interest of many persons, or where the parties are numerous and it is impracticable to bring all before the court within a reasonable time, one or more may sue or defend for the benefit of all.” The Rule has since been amended to list the prerequisites as follows:

(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Whichever version is applied, we find the prerequisites satisfied.

a. Numerosity

The Trial Court stated in his conclusory remarks that “you could have conceivably some 3,500 plaintiffs in a case,” and that he knew of no rule which would prohibit it. There was no explanation why a class action would not be superior where there is such an “unwieldy” number of plaintiffs. Joinder of so many claims is obviously, in the language of the Rule, “impracticable.”

In City of North Little Rock v. Vogelgesang, 273 Ark. 390, 619 S.W.2d 652 (1981), we held that 17 potential plaintiffs was too small a number to satisfy the Rule. In Cooper Communities, Inc. v. Sarver, 288 Ark. 6, 701 S.W.2d 364 (1986), we held that 184 were enough. In International Union of Electrical, Radio & Machine Workers v. Hudson, 295 Ark. 107, 747 S.W.2d 81 (1988), we held that “at least several hundred” class members were enough. The fact that there are several thousand claimants in this case is enough to satisfy the numerosity requirement.

b. Common questions

MOPAC’s brief seems to concede that there are common questions of law and fact relating to its conduct and that of Union Carbide. It argues, however, that they do not predominate the issues of causation and damages which will be different with respect to each claimant. Union Carbide’s brief adds the contention that plaintiffs who suffered physical injury may be entitled to recover for mental anguish but that the many who do not claim to have suffered physical injury will have to show wilful and wanton misconduct to recover.

It may indeed be true that the class can be and will be divided into subclasses with respect to theory of recovery if it is determined that MOPAC and Union Carbide were engaged in mere negligence, wilful and wanton negligence, or an ultrahazardous activity. The predominate question, however, in any case will be factual. The defendants’ actions will have to be determined, and then it will have to be determined if those actions were wrongful and to what degree. We have no hesitancy in saying there are common questions.

As to whether the common questions predominate others, such as causation in terms of class definition and damages, there is a clear overlap with the question of whether the class action is a superior method of handling the litigation in prospect. See H. Newberg, Class Actions, § 4.22 (1985). We will discuss it below along with the abuse of discretion standard of review.

c. Typicality

MOPAC and Union Carbide contend that the Summonses’ claim or claims are not typical of those of the other members of the class they seek to represent because, unlike some members, the Summonses allege no physical harm and only seek to recover for their inconvenience and fear in having to leave their home and for the expense of eating out.

The typicality requirement is discussed in H. Newberg, Class Actions, § 3.13, supra, as follows:

Typicality determines whether a sufficient relationship exists between the injury to the named plaintiff and the conduct affecting the class, so that the court may properly attribute a collective nature to the challenged conduct. In other words, when such a relationship is shown, a plaintiff’s injury arises from or is directly related to a wrong to a class, and that wrong includes the wrong to the plaintiff. Thus, a plaintiff’s claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based on the same legal theory. When it is alleged that the same unlawful conduct was directed at or affected both the named plaintiff and the class sought to be represented, the typicality requirement is usually met irrespective of varying fact patterns which underlie individual claims. [Footnotes omitted.]

Although the Summonses’ allegations as to their injuries and damages are different from those they describe for other members of the class, their claims are typical in the sense that they arise from the alleged wrong to the class which includes the wrong allegedly done to them, and that is sufficient.

d. Representation

Mrs. Summons testified that she understood her obligations in undertaking representation of the class and the possible costs involved. She said she would do whatever was necessary in that respect. The Summonses have alleged that they are represented by counsel competent to handle a class action, and MOPAC and Union Carbide have given us no reason to doubt that allegation.

2. Rule 23 (b)

Whether common questions of law or fact predominate and whether a class action is a superior method of deciding the case are, to a degree, necessarily subjective questions and very much related to the broad discretion conferred on a trial court faced with them.

In International Union of Electrical, Radio and Machine Workers v. Hudson, supra, we discussed the line of cases in which we have held that a trial court has broad discretion to protect the interests of the members of the class and to allow or disallow an action to proceed as a class action. The essence of the case now before us is the decision we must make whether the Trial Court abused its discretion in refusing the certification, and the questions of predominance and superiority are integral to that decision.

If the predominance of the liability aspects of the claims of the class members were to be judged solely on the basis of the number of cases in which the same issues of liability are to be decided, predominance of the common questions would undoubtedly be established. We recognize, however, that there are other factors to be considered.

In its brief, MOPAC emphasizes its contention that each of the potential class members will have to demonstrate the element of causation, and cites Ryan v. Eli Lilly & Co., 84 F.R.D. 230 (D.S.C. 1979), in which a United States District Court determined a class action would be inappropriate. The claim in that case was on behalf of daughters of mothers who had been administered a drug manufactured by the defendant. The drug which was used by the mothers resulted in an abnormal vaginal condition in the daughters. The Court discussed the fact that there would be varying factors with respect to liability as follows:

In deciding the issue of predominance this Court must predict the evidence likely to be introduced at trial. This is particularly true when purported class members are not standardized. See Windham v. American Brands, Inc., 68 F.R.D. 641 (D.S.C. 1975). Standardized in this sense refers to a class of individuals whose claims against a common defendant arise out of essentially identical fact patterns. The case at bar presents a different class of plaintiffs. The mothers of the proposed plaintiffs in this case each used a synthetic estrogen; however, the length of exposure, the reason for the drug’s use, the specific chemical formulation of the drug, the state of the art at the time of consumption or the manufacturer’s knowledge of synthetic estrogen’s carcinogenic effect and possible medical result in the absence of the estrogens are all specific points going toward proximate causation which will require proof for each individual class member. The Court is aware of decisions such as Samuel v. University of Pittsburgh, 506 F.2d 355 (3rdCir. 1974); wherein a bifurcation of trials between the liability and damages issues was held appropriate. Bifurcation here would not cure the deficiencies of the instant class action, since the liability issue alone will require individual proof as to each party plaintiff. It is the necessity of such separate evidentiary showings that leads this Court to conclude the common questions of fact do not predominate.

In this case, the liability question may be complicated in terms of the theories of liability advanced, however, those issues may be the same with respect to each of the claimants, and unlike the Ryan case, they will at least be the same as to members of subclasses such as those who claim physical injury and those who do not.

Cases such as Strauss v. Long Island Sports, Inc., 60 A.D. 501, 401 N.Y.S.2d 233 (1978), cited by Union Carbide, are not as easily distinguished. In the Strauss case, certification of a class of plaintiffs claiming injury from misleading advertising was held to be an abuse of discretion because each member of the class would have had to prove reliance. While we might say that that holding differs because each member of the class would have to prove an element of the tort, we cannot see a real difference from this case in which each claimant must, after proving basic negligence or other tortious conduct, prove causation, or that he or she was uprooted, disrupted, and otherwise injured by the acts of the defendants. We can only assume that the Strauss case is a traditionally hostile interpretation of the New York class action rule of the sort from which we are willing to part.

The Court in the Ryan case points out that the Advisory Committee to the Federal Rules of Civil Procedure commented that the class action is “ordinarily not appropriate” in “mass accident” torts because questions not only of damages but of liability and defenses to liability may affect different claimants in different ways. In 7B C. Wright, A. Miller, and M. Kane, Federal Practice and Procedure, § 1783 (1966), both sides of the controversy are presented. The other side is as follows:

In many ways [Federal] Rule 23(b)(3) seems particularly appropriate for some tort cases of this type. Thus, some courts have ignored the Advisory Committee’s doubts and have allowed mass tort cases to be brought under subdivision (b)(3). The central issue of liability, for example, may be a difficult one that occasionally will require lengthy expert testimony, perhaps concerning the physical condition of a vehicle or the state of a technological art in a particular field of transportation or manufacturing. If the various tort claims were tried individually, the evidence would have to be repeated time and again. . . . [Footnotes omitted.]

The repeated litigation of the liability question and the attendant possibilities of inconsistent results in a case like this one outweigh the admitted fact that each claimant will have different damages evidence. A factor we recognized in Drew v. 1st Fed’l S & L Ass’n of Ft. Smith, 271 Ark. 667, 610 S.W.2d 876 (1981), and in the International Union case, and which is central to the result we reach here is the basic consideration of fairness. An ingredient of that consideration is the point of our decision in the International Union case:

By limiting the issue to be tried in a representative fashion to the one that is common to all, the trial court can achieve real efficiency. The common question here is whether the unions can be held liable for . the actions of their members during the strike. If that question is answered in the negative, then the case is over except for the claims against the named individual defendants which could not be certified as a class action. If the question is answered affirmatively, then the trial court will surely have ‘splintered’ cases to try with respect to the damages asserted by each member of each of the subclasses, but efficiency will still be achieved, as none of the plaintiff's would have to prove the unions’ basic liability.
Is that unfair? It is not unfair to the unions, as they will be able to defend fully on the basic liability claim, and they will have the opportunity to present individual defenses to the claims of individual class members if their liability has been established in the first phase of the trial. They lose nothing. Would it be fair to the class members to require them to sue individually? The evidence so far shows that each putative class member has a claim that is too small to permit pursuing it economically. If they cannot sue as a class, the chances are they will not sue at all. We agree with the unions’ argument that the sole fact that the claims are small is not a reason to permit a class action, but it is a consideration which has appeared when other courts, as we must do, have considered whether the class action is superior to other forms of relief. See C. Wright, A. Miller, and M. Kane, supra, § 1779, n. 21, citing Roper v. Consurve, Inc., 578 F.2d 1106 (5th Cir. 1978), affirmed on other grounds, sub nom. Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326 (1980); Werfel v. Kramarsky, 61 F.R.D. 674 (D.C.N.Y. 1974); and Buchholtz v. Swift & Co., 62 F.R.D. 581 (D.C. Minn. 1973).
We recognize that the trial court has substantial power to manage a class action even though the directions given in our Rule 23 are not as extensive as those given in the comparable federal rule. This power to manage the action contributes to the discretion we find in the trial court to determine whether a class should be certified. We conclude there was no abuse in this case.

Our opinion in the International Union case was hardly an exhaustive review of all the considerations leading to the conclusion that the class action is the superior manner of deciding the typical mass tort case. That has been done, however. D. Rosenberg, Class actions for Mass Torts: Doing Individual Justice by Collective Means, 62 Ind. L. Rev. 560 (1986-1987). Here are some excerpts from the article:

In mass tort cases involving claims or personal injury, which pose daunting problems of causation and remedy, the price of individual justice is notoriously high. Because they typically involve complex factual and legal questions, mass tort claims are exceedingly, if not prohibitively, expensive to litigate. The questions of whether the defendant’s conduct failed to satisfy the governing standard of liability frequently entail interrelated technological and policy issues that require extensive discovery, expertise, and preparation to present and resolve adequately. Equally demanding are the causation issues in mass tort cases, such as whether the plaintiffs condition was caused by exposure to the substance in question or to some other source of the disease risk.
The case-by-case mode of adjudication magnifies this burden by requiring the parties and courts to reinvent the wheel for each claim. The merits of each case are determined de novo even though the major liability issues are common to every claim arising from the mass tort accident, and even though they may have been previously determined several times by full and fair trials. These costs exclude many mass tort victims from the system and sharply reduce the recovery for those who gain access. Win or lose, the system’s private law process exacts a punishing surcharge from defendant firms as well as plaintiffs.
***
These conditions generally disadvantage claimants. Because defendant firms are in a position to spread the litigation costs over the entire class of mass accident claims, while plaintiffs, being deprived of the economies of scale afforded by class actions, can not, the result will usually be that the firms will escape the full loss they have caused and, after deducting their attorney’s shares, the victims will receive a relatively small proportion of any recovery as compensation. As a consequence, the tort system’s primary objectives of compensation and deterrence are seriously jeopardized.
***
Because of their cost-spreading advantages, a defendant firm typically can afford not only to invest more in developing the merits of the claim than the opposing plaintiff attorney, but also to finance a “war of attrition” through costly discovery and motion practice that depletes the adversary’s litigation resources. The consequences of redundantly litigating common questions thus skews the presentation of the merits, promotes abusive strategic use of procedure, needlessly consumes public resources, and ultimately drains away a large amount of the funds available to redress by judgment or settlement, victim losses.

We can cite no case like this one where it has been held that the trial court abused its discretion by denying certification. We can, however, cite a very similar case where it was held that the trial court did not abuse its discretion in certifying a class alleging injury as the result of a chemical fire caused by a railroad accident. Reynolds v. CSX Transportation, Inc., 55 Ohio App.3d 19, 561 N.E.2d 1047 (Ohio App. 1989). In that case, a master recommended against certification because there would be five ill-defined sub-classes of plaintiffs. The Trial Court disagreed. The Court of Appeals held there was no abuse of the Trial Court’s discretion.

In applying Ohio Civil Procedure Rule 23A, which was apparently like the Federal Rule and like the current Arkansas Rule, and Rule 23B containing the same rather subjective criteria as the parallel sub-sections of the Arkansas and Federal Rules, the Trial Court was quoted as follows:

One time answers can be had to the issues of negligence and malice, such as: What were the duties of the respective defendants? What did they undertake to do or not do in respect to those duties, if any? Was there a breach of duty? Was there a conscious disregard for the rights and safety of others that had a great probability of causing substantial harm?

The Court of Appeals then wrote:

We conclude that the trial court’s decision to certify the plaintiffs’ case as a class action to the issues of negligence and malice was not an abuse of discretion. The court’s order was not unreasonable, arbitrary or unconscionable. Rather, it was a well-reasoned decision based upon the trial court’s unique ability to determine which procedural devices are best for handling such unwieldy cases.

As noted above, the Reynolds decision was a bow to a trial court’s discretion, and thus hardly in direct support of our conclusion here. It does, however, provide an example of a case where that which the plaintiffs ask here has been found to be reasonable under very similar circumstances.

We are well aware of our remark in the International Union case that, had the Trial Court refused to certify the class we might well have affirmed, but we have not held that a trial court’s discretion is so broad on this issue that it cannot be reviewed. If a trial court’s decision not to certify a class action in this type case is at all reviewable, then this is the time and the sort of case in which to review it. That is especially so when it is possible that a large number of persons who may have legitimate claims not worth pursuing because of the costs of our system of justice may lose those claims if they are not allowed to proceed together as a class. By not certifying a class, a trial court can cause the problem to “go away” to the extreme disadvantage of the claimants unless that decision is reviewable. It is especially important that we review an order such as the one in this case given the newness of our decision in the International Union case and the recent changes in Rule 23(a).

Given our conclusion that the Trial Court erred in stating that the facial prerequisites of Rule 23(a) were not satisfied, we are left with consideration of the Trial Court’s remarks at the conclusion of the certification hearing and the final order. Most of the factors he noted seem to us to support certification. The language of the Trial Court’s order is not helpful to an understanding of the decision because it consisted only of conclusions without reasons.

We conclude this opinion with a caveat; the only issue we have addressed is whether the class should have been certified. We have not intimated, nor have we meant to intimate, that any of the class members will or should recover. The question of liability is not at all before us.

The order refusing to certify the class is reversed and remanded for proceedings consistent with this opinion.

Hays, J., dissents.

Brown, J., concurs.

Robert L. Brown, Justice,

concurring. I agree with the majority opinion but feel constrained to emphasize an additional point. We have held many times that broad discretion vests in the trial courts to grant class certifications. See, e.g., Security Benefit Life Insur. Co. v. Graham, 306 Ark. 39, 810 S.W.2d 943 (No. 90-248, June 10, 1991); Lemarco, Inc. v. Wood, 305 Ark. 1, 804 S.W.2d 724 (1991); First Nat’l Bank of Fort Smith v. Mercantile Bank of Jonesboro, 304 Ark. 196, 801 S.W.2d 38 (1990); Cooper Communities, Inc. v. Sarver, 288 Ark. 6, 701 S.W.2d 364 (1986); Drew v. First Federal Savings & Loan Assoc, of Ft. Smith, 271 Ark. 667, 610 S.W.2d 876 (1981). We have also held that that broad discretion does not mean unlimited discretion. See Ford Motor Credit Co. v. Nesheim, 287 Ark. 78, 696 S.W.2d 732 (1985).

The decision today, in my judgment, does not weaken or undermine this wide grant of authority in the trial courts or in any way signal that we intend to decide class certification issues on a case-by-case basis. The decision, rather, emphasizes once more the policy this court first recognized in 1988 not to disfavor class actions. See International Union of Electrical Radio and Machine Workers v. Hudson, 295 Ark. 107, 747 S.W.2d 81 (1988).

Here an accident occurred common to all potential class members. The alleged liability, injury, and damages emanating from that accident embrace common issues such as duty of care and foreseeability which predominate over issues affecting only individual members. Thus, a critical criterion of Ark. R. Civ. P. 23(b) is satisfied. By deciding common issues, efficiency is achieved, even though other issues remain to be decided, and we have previously recognized that fact. See Lemarco, Inc. v. Wood, 305 Ark. 1, 804 S.W.2d 724 (1991). That is not to say that considerable variance may well exist among class members relating to causation, injury, and damages •— a state of affairs that clearly troubled the trial court. But, again, the common predominating issues compel certification, and I see no superior method for adjudication.

Steele Hays, Justice,

dissenting. Beginning with Drew v. First Federal Savings and Loan Association, 271 Ark. 667, 610 S.W.2d 876 (1981), through our most recent case, Lemarco, Inc. v. Wood, 305 Ark. 1, 804 S.W.2d 724 (1991), this court has recognized the broad discretion of the trial judge in deciding whether to certify a case as a class action. Even though we saw a need to liberalize class actions in Arkansas in International Union of Electrical, Radio and Machine Workers v. Hudson, 295 Ark. 107, 747 S.W.2d 81 (1988), we explained that the court’s broad discretion cuts both ways:

[t]he trial judge in this case could have refused to certify that action as a class action, and we might well have upheld him in that exercise of his broad discretion. Id at 121, 747 S.W.2d at 88-89.

If the principle of “broad discretion” is to have any substance, the trial court’s decision to deny class certification in this case should be affirmed.

The majority is concerned that if a trial court’s discretion is too broad there is the possibility it cannot be reviewed on appeal. I would not propose giving trial courts carte blanche, only that the trial court here did not abuse its broad discretion in denying class certification.

There was no actual chemical spill from the tank car, therefore, the appellants’ claims are limited to the period of time they were evacuated from their homes or businesses. They allege expenditures were incurred for food, clothing, shelter, and medical treatment and that they suffered pain and mental anguish. At the class certification hearing the first witness was Janet Jones, an employee of the McHenry Law Firm. She testified that she had been working on a list of people who believed they had been harmed by the evacuation. Her list included over 5,000 people and she had personally talked with about 1,000 of them. She said that one complaint was for fright attributable to a chemical leak and worry about getting out of the area. Some individuals believed they smelled a dangerous chemical. Others indicated they had experienced physical problems such as a runny nose, watery eyes, sore throat and headaches, however, the class attorney testified that claims due to chemical exposure would not be included in the suit. Jones further testified that some potential class members claimed lost wages ranging from a few hours to the entire day. Jones also knew of one man who stayed at a motel and others who bought meals at restaurants. Athena Mae Wilson, an evacuee, testified that her only claim was for transportation costs for a neighbor to drive her from Eastgate Terrace to Pulaski Heights in Little Rock. The class representatives, Wilma and Charles Summons, alleged that their claims were typical of the class members, yet Mrs. Summons answered the following questions in this manner:

Q: Did any of the people that you talked to indicate to you that [they were forced to seek medical treatment?]
A: None that I talked to.
* * *
Q: Did anyone lose wages?
A: I don’t know that.
* * *
Q: Were some of the people forced to spend money for motels and hotels?
A: If they didn’t have anywhere else to go, I’m quite sure they did.
Q: Of your own knowledge, do you know whether they did?
A: I don’t know that.
Q: Do you know whether people were forced to spend money for food?
A: I was.
Q: What about other people?
A: I didn’t have dinner with anybody else, I don’t know.

Although party representative Charles Summons was not at the hearing, in his deposition he testified that besides the cost of the evening meal his only injury was “inconvenience.” The final witness was Sam Martin who testified merely that the police advised him to leave the area, so he drove his truck to his son’s house.

The trial judge assessed the witnesses firsthand and concluded this was not manageable as a class suit. I agree. The majority is now directing the judge to hear this as a class action. Heretofore, we have reversed the trial court’s decision regarding class certification only once and that was where the court granted certification. See Ford Motor Credit Co. v. Nesheim, 278 Ark. 78, 696 S.W.2d 732 (1985). Thus we have never previously ordered a trial court to grant cértification. This is not to imply there should never be a reversal of an order denying class certification, only to observe that we are deviating from prior case law in a situation that clearly supports the application of our principle of broad discretion in class action certification. In Looper v. Madison Guaranty Savings & Loan Ass’n., 292 Ark. 225, 729 S.W.2d 156 (1987), we wrote:

When we examine a discretionary decision made by a chancellor, the question is not what we would have done, but whether, as a matter of law, discretion was abused—was the judgment call arbitrary or groundless? Keirs v. Mt. Comfort Enterprises, et al., 266 Ark. 523, 587 S.W.2d 8 (1979); Robbins v. Guy, 244 Ark. 590, 426 S.W.2d 393 (1968).

Nothing in the majority opinion supports the conclusion that this court has done anything other than merely substitute its own discretion for the trial court’s.


author: Tom Glaze, Justice. Steele Hays, Justice,

text:
    James C. PLEDGER, Commissioner of Revenues, Dep’t of Finance and Administration, State of Arkansas v. ILLINOIS TOOL WORKS, INC.
    90-242
    812 S.W.2d 101
    Supreme Court of Arkansas
    Opinion delivered June 24, 1991

      John Theis, William E. Keadle, Robert L. Jones, Cora Gentry, David Kaufman, Malcolm Bobo, Beth B. Carson, and Joyce Kinkead, by: Rick L. Pruett, for appellant.

      Jack, Lyon & Jones, P.A., by: Eugene G. Sayre, for appellee.
   Tom Glaze, Justice.

This tax case addresses for the first time the effect of the “unitary business principle” on Arkansas’s Uniform Division of Income for Tax Purposes Act (UDITPA), Ark. Code Ann. §§ 26-51-701 —to— 723 (1987, Supp. 1989). This Act governs how Arkansas imposes its respective corporate and franchise taxes on the earnings of corporations that have multistate and multinational entities. UDITPA is designed to fairly apportion among the states in which a corporation conducts its multistate business a fair amount of value or business income earned by the corporations’ activities in each state. Generally, under UDITPA, net taxable “business income” of a corporate taxpayer involved in a multistate business is apportioned upon a well-recognized three factor formula of tangible property, sales, and payroll.

Appellee, Illinois Tool Works (ITW), is a multistate and multinational corporation having a worldwide business in the manufacturing of tools, fasteners, packaging products and the leasing of machinery. ITW has operating divisions in seventeen places in the United States and conducts business in several foreign countries. One of ITW’s manufacturing plants is located in Pine Bluff, Arkansas. Its corporate headquarters or “commercial domicile” is in Chicago, Illinois.

ITW determined that, for UDITPA purposes, certain capital gains income it had earned in 1981 through 1983 from six different capital assets was “nonbusiness income;” thus it excluded this income when calculating its allocation of taxes to this state. Instead, ITW allocated the income from the sale of these capital assets to its “commercial domicile,” in Chicago and the income was taxed under the Illinois corporate income tax laws. ITW’s six capital assets were stock in two Japanese manufacturing companies, NISCO and NIFCO; stock in Computer Products, Inc.; undeveloped real property located near ITW’s headquarters in Chicago; U.S. Treasury Notes and foreign currency transactions.

The appellant, Arkansas Department of Finance and Administration, disagreed with ITW’s classification of this income, asserting that the income constituted “business income” for purposes of Arkansas’s UDITPA. Accordingly, appellant assessed ITW additional taxes of approximately $45,164 for the years 1981-1983. After losing an appeal in an administrative hearing, ITW paid the additional taxes under protest and appealed to the chancery court.

The chancery court, relying on five United States Supreme Court cases decided in the 1980’s, held that the “unitary business principle” must be utilized in determining whether or not intangible income of multistate or multinational corporate taxpayer is to be classified as “business income” or “nonbusiness income” for UDITPA purposes. In applying the principle in this case, the chancellor further concluded that ITW’s aforementioned income from the sale of its six capital assets was not taxable by the state because the income was in no way connected with ITW’s Arkansas business activities. The appellant appeals from the lower court’s holding, arguing that the chancellor misapplied the law and made erroneous findings of fact. We find no error and therefore affirm.

Under the UDITPA, “business income” is defined as follows:

Income arising from transactions and activity in the regular course of the taxpayer’s trade or business includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer’s regular trade or business operations.

Ark. Code Ann. § 26-51-701 (a) (Supp. 1989). As we noted previously, all “business income” is apportioned to this state using an established formula. Ark. Code Ann. § 26-51-709 (1987). Also, under the Act, “nonbusiness income” is defined as all income other than “business income,” § 26-51-701 (e), and is allocated specifically to the state having the most logical nexus with the asset producing the “nonbusiness income” (usually its “commercial domicile”) rather than being apportioned among the states where the corporation conducts its business.

In the mid-1970’s, the Revenue Division of the Arkansas Department of Finance and Administration adopted certain corporate income tax regulations to implement the provisions of Arkansas’s UDITPA. Arkansas is a member of the Multistate Tax Compact and the regulations it (and other states) adopted were suggested by the Multistate Tax Commission (MTC). These regulations were generally referred to as “full apportionment” regulations because they broadly construed the concept of “business income” and very narrowly construed the concept of “nonbusiness income” for UDITPA purposes.

In Qualls v. Montgomery Ward & Company, 266 Ark. 207, 585 S.W.2d 18 (1979), this court adopted the “full apportionment” rationale. In Qualls, Montgomery Ward received interest from loans made to subsidiary and related corporations none of which were located or did business in Arkansas. Because there was no activity in Arkansas in relation to the loans, Montgomery Ward contended that the interest was “nonbusiness income” taxable in its “commercial domicile” in Illinois. This court disagreed and held that Montgomery Ward’s interest income was “business income,” not “nonbusiness income,” based upon the fact that the interest income was commingled with the company’s other general funds to be used for general corporate purposes, which included its business activities in Arkansas.

After the Qualls decision, the U.S. Supreme Court changed the “full apportionment” rationale by adding the following two requirements under the Due Process Clause of the fourteenth amendment: 1) a minimal connection or nexus between the interstate activities and the taxing state; and 2) a rational relationship between the income attributed to the state and the intrastate values of the enterprise. Mobile Oil Corp. v. Commissioner of Taxes, 445 U.S. 425 (1980). The first nexus requirement is met if the corporation avails itself of the substantial privilege of carrying on business within the state. The Supreme Court labeled the second due process requirement, the “unitary business principle,” and explained the application as follows:

(T)he linchpin of apportionability in the field of state income taxation is the unitary business principle. In accord with this principle, what appellant (taxpayer) must show, in order to establish that its dividend income is not subject to an apportioned tax in Vermont, is that the income was earned in the course of activities unrelated to the sale of petroleum products in that state.

The cases following Mobil all cited the above language and utilized the “unitary business principle” analysis. Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U.S. 207 (1980); ASARCO, Inc. v. Idaho State Tax Comm’n, 458 U.S. 307 (1982); F.W. Woolworth Co. v. Taxation & Revenue Dept., 458 U.S. 354 (1982); Container Corp. v. Franchise Tax Board, 463 U.S. 159 (1983). Under the “unitary business” rationale, as expressed in these decisions, the general test for determining whether a diversified group of businesses had a “unitary business” relationship was to determine whether the income that the state was attempting to tax resulted from functional integration, centralization of management, and economies of scale utilized by the corporate group.

In response to the Supreme Court cases cited above, the Arkansas Revenue Department adopted Regulation 1984-2, which recognized the Supreme Court’s due process limitation but applied the “unitary business principle” only to dividend income. In this appeal, the appellant relies on this regulation to argue that since ITW’s capital gains were not derived from dividend income, the income is still taxable. We do not agree with the appellant’s reading of these Supreme Court cases as limiting the “unitary business principle” analysis only to dividend income.

In ASARCO, the Supreme Court addressed Idaho’s argument that dividend income received by ASARCO should be considered a part of a “unitary business” if the intangible property is acquired, managed or disposed of for purposes relating or contributing to the taxpayers’ business. The Court rejected Idaho’s “full apportionment” argument and held that the dividend income of ASARCO was not taxable by Idaho. In so holding, the Court stated the following:

This definition of unitary business would destroy the concept. The business of a corporation requires that it earn money to continue operations and to provide a return on its invested capital. Consequently, all of its operations, including any investment made, in some sense can be said to be “for purposes related to or contributing to the [corporation’s] business.” When pressed to its logical limit, this conception of “unitary business” limitation becomes no limitation at all.

Although the main dispute in ASARCO concerned dividend income, Idaho also attempted to tax certain ASARCO interest and capital gains from stock sales. However, Idaho and ASARCO had agreed that interest and capital gains derived from these sales should be treated in the same manner as the dividend income. The Supreme Court concurred with the parties’ agreement, stating that “One must look principally at the underlying activity, not at the form of investment to determine the propriety of apportionability.” The Supreme Court then proceeded to hold that Idaho’s attempt to tax this other income also violated the due process clauses.

Clearly from reading ASARCO, the Supreme court did not intend for the “unitary business principle” to apply to dividend income only. Accordingly, we hold that the chancellor here was correct in applying the “unitary business principle” analysis to the facts of this case. In sum, we believe the appellant’s reading of the Supreme Court cases is much too narrow, and those cases in no way can be construed to uphold the constitutionality of appellant’s Regulation 1984-2.

We note the appellant’s suggestion that the Supreme Court backed off of its ASARCO holding in its most recent case, Container Corp. v. Franchise Tax Board, 463 U.S. 159 (1983). In Container, the Court stated that there was a requirement that the out-of-state activities of the purported “unitary business” be related in some concrete way to the in-state activities. The Court explained that the functional meaning of this requirement is that there be some sharing or exchange of value not capable of precise identification or measurement — beyond the mere flow of funds arising out of a passive investment or a distinct business operation — which renders formula apportionment a reasonable method of taxation.

Again, we disagree with the appellant’s reading of this Supreme Court case. We do not see how the “flow of value” analysis in Container benefits the appellant’s case here. It appears to be just a rewording of principles set out in the earlier cases. Further, we do not read the Container case as limiting the Court’s holding in AS ARCO. To the contrary, AS ARCO is cited with approval throughout the Container case.

In sum, we agree with the chancellor that, in complying with the holdings in the foregoing Supreme Court cases, he was obliged to utilize the “unitary business principle” in this case. Those holdings also require us to overrule the case of Qualls v. Montgomery Ward, 266 Ark. 207, 585 SW.2d 18 (1979), and to declare appellant’s Regulation 1984-2 to be unconstitutional. As a side comment, we note that Arkansas is not the first state to have to reevaluate its taxation of multistate corporations after the above Supreme Court cases were decided. See, e.g., James v. Intern. Tel. & Tel. Corp, 654 S.W.2d 865 (Mo. banc 1983); American Homes Products Corp. v. Limbach, 49 Ohio St. 3d 158, 551 N.E.2d 201 (1990); Corning Glass Works v. Va. Dept. of Tax, 402 S.E.2d 35 (Va. 1991). Now that we have affirmed the chancellor’s application of the law in this case, we must address the appellant’s challenge that the chancellor’s findings of fact in regard to ITW’s capital assets are clearly erroneous.

First, in applying the “unitary business principle,” the chancellor found that ITW’s capital gains income from the sale of its stock interest in NISCO, NIFCO, and CPI was “nonbusiness income” for Arkansas UDITPA purposes. We agree. At no time did ITW hold the majority of the stock in these companies, and while ITW had two or three directors on the companies’ boards, there is no showing that ITW had a controlling interest or part. The potential to operate a company as part of a “unitary business” is not dispositive, when in fact there is a discrete business enterprise. F.W. Woolworth Co. v. Taxation & Revenue Dept., 458 U.S. 354 (1982). There were no common employees or officers, and ITW did not provide any administrative services to the companies. While NISCO and NIFCO did utilize some of ITW’s patented technology, they paid a royalty to ITW for the use of that technology and that royalty income was taxed by ITW as “business income.” In sum, the record shows that these companies were operated as discrete and separate businesses and not as a part of a “unitary business.”

Further, the record also clearly supports the chancellor’s finding that ITW’s capital gains from the redemption of U.S. Treasury Notes, foreign currency transactions, and the installment sale of undeveloped land located in Chicago were not an integral part of ITW’s regular manufacturing and leasing businesses carried on at the Pine Bluff plant. Instead, we agree with the chancellor’s classification of these assets as normal or passive investments of ITW. As pointed out so clearly in AS ARCO, the business of a corporation requires that it earn money to continue its operations and to provide a return on its invested capital but the use of this money for the business does not fit the “unitary business principle” test.

For the foregoing reasons, we affirm the chancellor’s findings of fact and conclusions of law in applying the “unitary business principle” to the facts of this case. In conclusion, we briefly mention ITW’s argument that the chancellor erred in denying its request for attorneys’ fees. We simply are unable to reach this issue because ITW failed to file a notice of a cross appeal as required under ARAP Rule 3(d). See Independence Fed’l S&L Ass’n v. Davis, 278 Ark. 387, 646 S.W.2d 336 (1983).

Affirmed.

Hays, J., dissents.

Steele Hays, Justice,

dissenting. I respectfully disagree with the majority, as I believe it has rushed to judgment in an area that will have substantial impact upon our state, and is at the same time, complex, transitional and, above all, abstruse. See P. Hartman, Federal Limitations on State and Local Taxation § 9:30 (Supp. 1990).

While the United States Supreme Court has begun work on the unitary business principle, as the majority discussed, the application and impact of that principle has generated much litigation and very little harmony. Id. at 396. As evidenced just by the complexities of the discussion of this issue, answers are not easily ascertainable and few have been provided by the Supreme Court decisions. See e.g., P. Hartman, Federal Limitations on State and Local Taxation § 9 (1981 and Supp. 1990); J. Hellerstein, State Taxation, Corporate Income and Franchise Taxes §§ 8 and 9 (1983 and Supp. 1989); Constitutional Law 96 Harv. L. Rev. 62 (1982); C. Floyd, The Unitary Business inState Taxation: Confusion at the Supreme Court?, 1982 B. Y. U. L. Rev. 465. It has even been suggested that because of its complexities, the issue is one the courts are not equipped to handle:

Given the limitations within which the court must operate, it is entirely possible that it would be infeasible for the court to examine all of the intricacies of the unitary business and formula apportionment in order to determine whether a business is unitary and fairly subjected to taxation by a standardized apportionment formula. Fair formula apportionment of divers kinds of business involves a substantial knowledge of the operations of a great variety of industries that are taxed, as well as technical problems of accounting. Courts are hardly equipped satisfactorily to handle such problems. Perhaps the complexities of the problem suggest some broad legislative guidance, fair to the states and the taxpayers, as part of a solution. [Our emphasis.]

P. Hartman, Federal Limitations on State and Local Taxation, § 9:29 (1981).

With that in mind, I think it improvident to decide, as the majority does, the constitutionality of a question that the Supreme Court itself has not yet passed on, and which still stands as good law. The argument presented by the state in this case is closely related to the issue in Qualls v. Montgomery, 266 Ark. 207, 585 S.W.2d 18 (1979), and has not yet been addressed by the United States Supreme Court, much less overruled, as pronounced by the majority.

In Qualls, we addressed the question of interest from loans made by Ward to relative subsidiaries and corporations and whether that should qualify as “business income” and, hence, apportionable. Our current statute provides the same definition relevant in Qualls-.

26-51-701 (a) “Business income” means income arising from transactions and activity in the regular course of the taxpayer’s trade or business and includes income and tangible and intangible property if the acquisition, management and disposition of the property constitue integral parts of the taxpayer’s regular trade or business operations.

We held that the interest was business income, not, as the majority states, simply because funds were commingled, but because the loans constituted transactions in the “regular course of Ward’s business,” pursuant to the statutory definition.

We addressed Ward’s contention that the corporate relatives were not part of a unitary business, and responded, in essence, that that question need not be answered if the income came from activities that were in the regular course of the taxpayer’s trade or business. Or, to put it in terms the United States Supreme Court would now employ, the fact that the loan transactions were part of Ward’s regular course of business, was sufficient to find these transactions were part of a unitary business. This is essentially what the state is arguing here—that the investment income is part of ITW’s unitary trade or business because the investment activities make up part of ITW’s regular trade and business.

The Supreme Court’s discussions in those cases cited by the majority involved only whether there was unity between the taxpayer and the income source on the basis of the extent and quality of interconnectedness of the taxpayer and the questioned operation. The court did not address the question of an income source being part of the taxpayer’s unitary business, solely on the basis of the frequency or regularity of an activity, as was the situation in Qualls, and specifically here, as argued by the state, that investments were a regular and integral part of its business.

This approach is not novel with either Qualls or the appellant. In fact, as pointed out in P. Hartman, Federal Limitations on State and Local Taxation § 9:30 at 437-439 (Supp. 1990), in ASARCO v. Idaho State Tax Comm’n, 458 U.S. 307 (1982), cited by the majority, ASARCO’s own counsel agreed that while not present in its case, investments could be an “adjunct to the actual conduct of the taxpayer’s own business,” and could be found to be part of a unitary business, and apportionable. And while the United States Supreme Court has not addressed this question, several lower courts have and the inclination is to allow apportionment in those cases. See e.g., Bendix Corp. v. Director Div. of Tax., 568 A.2d 59 (N.J. Super A.D. 1989); NCR Corp. v. Comptroller of the Treasury, 313 Md. 118, 544 A.2d 764 (1988); Welded Tube Co. of America v. Comm., 515 A.2d 911 (Pa. Comwlth 1986); Lone Star Steel Co. v. Dolan, 669 P.2d 916 (Colo. 1983).

The other important factor which the majority fails to mention is the burden of proof in these cases. It is not incumbent upon the state to show sufficient nexus between the apportioned income and the taxpayer. Rather, there is no question but that the burden is on the taxpayer. The state’s taxation is of course presumptively constitutional, Fisher v. Perroni, 299 Ark. 227, 771 S.W.2d 766 (1989); Love v. Hill, 297 Ark. 96, 759 S.W.2d 550 (1988), and to overcome this presumption, the taxpayer has the “distinct burden of showing by clear and cogent evidence,” that the statutory scheme “results in extraterritorial values being taxes.” Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159 (1983); Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U.S. 207 (1980). The question in this case then, boils down to whether ITW showed by clear and cogent evidence that taxation on the investment income was unconstitutional.

There was evidence, as noted by the majority, to show a lack of interconnectedness between ITW and the companies or sources in which it had invested, that is to say, ITW did not have a majority share in its holdings and had no controlling interest, had no common officers or employees and did not provide any administrative services to the companies.

While this may or may not have been clear and cogent evidence of interconnectedness, such a finding is not controlling here. Rather, we look at the evidence in light of the state’s argument that investing was a regular part of the business so as to make the investing operations part of ITW’s unitary business. There is no discussion of such evidence in either the appellee’s brief or the majority opinion, yet a mere glance at the record substantiates the state’s claim. The most critical evidence on this point was given by ITW’s vice president and treasurer, David Byron Smith, who testified that all the management of investments was handled through his office; that it was a significant part of the treasurer’s operations; that he would spend an hour or so each day working on investments, and that such investments were one of four priorities of the company. He further testified the money received from investments was used as working capital, and working capital was used for investment purposes, but the testimony was ultimately inconclusive on this point. In the face of this testimony, it is clear, to me at least, that ITW has failed to meet its burden.

As the direction of the United States Supreme Court is unsettled, and the consequences far reaching, I cannot join the majority’s venture in this area, particularly, where the record has not been sufficiently developed on this question and the appellee’s burden of proof was consequently lacking.

       We note that there were originally seven capital assets in dispute, but the appellant conceded that income from the sale of preferred stock was “nonbusiness income” under UDITPA.