ORDER OF DECEMBER 23,2009. On May 11, 2007, the Plaintiffs, Jessica Edwards, Janet T. Justice, and Alarm

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1 ELECTRONICALLY FILED 12/23/2009 2:26 PM CV CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA ANNE-MARIE ADAMS, CLERK Jessica Edwards, * Janet Judge, * -. * Alarm One, Inc., Individually and on IN THE CIRCUIT COURT OF behalf of all others similarly situated, JEFFERSON COLINTY, ALABAMA * PLAINTIFFS CIVIL AC'TION NO. CV * VS. Jefferson County Commission, et al DEFENDANT * * ORDER OF DECEMBER 23,2009 On May 11, 2007, the Plaintiffs, Jessica Edwards, Janet T. Justice, and Alarm One, Inc. filed this suit for themselves and all persons or entities who or which have paid Jefferson County Alabama occupational taxes or business license taxes imposed under the authority of Act and the Ordinances adopted in accordance therewith to have this Court determine and declare that said Act was repealed by Act No , and to have the Court require Jefferson County to refund all such taxes collected by Jefferson County since April 1,2000! On January 12, 2009, this Court entered a declaratory judgment holding that Act was repealed by Act The Court's judgment finds that the taxpayers who constitute the Plaintiff-Class are entitled to a refund of the subject taxes since April 1, 2000, but that because of equitable considerations set out by 1 In the prior Orders of this Court the term "occupational taxes" is defined to include occupational taxes and business license taxes or fees imposed by the County pursuant to Ordinance IVos and 1172 under the authority of Act All references to taxes, fees, funds, revenues, or proceeds in this Order includes the "occupational taxes" as previously defined by this Court.

2 ORDER OF DECENIBER 22,2009 Jefferso~i Co. CV Page 2 the Court in said judgment, the taxpayers' right to enforcement of the refund would be applied prospectively only. 1. Defendant's "Moot~iess" Motion On August 14, 2009, the Alabama Legislature enacted Act which provides, in part, for the retroactive validation of taxes collected pursuant to Act 'The County contends, therefore, that Act renders moot this Court's Order of January 12,2009, requiring the refund of such taxes.' follows: Article IV Section 95 of The Alabama Constitution provides, in part, as After suit has been commenced on any cause of action, the legislature shall have no power to take away such cause of action, or destroy any existing defense to such suit. The Plaintiffs argue that Act is an attempt to "take away" its cause of action for a refund of the taxes in question, and that Act violates this Constitutional limitation on Legislative authority. On November 10,2009, the County filed MOTION TO DISSOLVE INJUNCTION, VACATE ESCROW ORDER, RELEASE ESCROWED FUNDS TO JEFFERSON COUNTY GENERAL FUND, AND MOOT PLAINTIFFS' MOTIONS TO DISBURSE FUNDS AND TO ESTABI-ISH QUAI-IFIED SETTLEMENT FWD. The Court and attorneys refer to this November 10,2009, motion as the County's "Mootness" Motion. In a letter to the Court on November 12, 2009, the County's attorney stated that "nothing in the motion at issue purports to moot this lawsuit, or this Court's January 12, 2009, Order." Before the Supreme Court the County asserted however, "... [Tlhe Appellants construe the question of mootness raised by the New Act to refer not only to the dismissal of this appeal but to the vacation of the trial judgment that is being appealed."

3 Page 3 On August 17, 2009, Plaintiffs filed a Motion To Show Cause seeking to have this Court declare invalid the retroactive provision (Section 7) of Act By conference call with the attorneys of record on August 19, 2009, the parties' attorneys agreed to delay any action on said Motion To Show Cause pending the outcome of the appeal in this case. The attorneys were advised by the Court that the Motion To Show Cause would not be scheduled for hearing until a party made a request for same. The Supreme Co~.~rt directed the parties to file briefs regarding the issue of whether the Legislature's purported retroactive validation of the taxes in question rendered moot the issues on appeal before the Supreme Court. On August 25, 2009, the Alabama Supreme Court affirmed this Court's ruling of January 12, 2009, which holds that by its enactment of Act the Alabama Legislature repealed the County's authority to impose occupational and business license taxes under Act and Jefferson County Ordinance Nos and In the Order of January 12, 2009, as affirmed by'the Supreme Court, the County was directed to deposit occupational tax revenue in an escrow account pending further orders of the Court. The Order of January 12, 2009, stated that "All escrow funds shall be deemed the funds of the respective taxpayers and not the property or assets of the County...."

4 Page 4 On March 20, 2009, this Court entered an Order Regarding Escrow of Funds which allowed the occupational tax revenue to be deposited to the County's General Operating Account in order to take advantage of a favorable interest rate. 'The Order further provided, however, as follows:... this Court's authorization for said funds to be maintained in the County's Operating Account does not alter, amend, or diminish the status of said funds as the assets, properties, or monies of individual taxpayers and businesses for whom same are paid or remitted to the County. All interest which accrues on said escrowed funds shall also be deemed the assets, properties, or monies of the taxpayers or businesses for whom or for which such funds are held and on which such interest is earned. 'The County must employ such accounting procedures andlor entries as are necessary to identify said funds within the said General Operating Account. On March 20, 2009, this Court also entered an Order Granting Emergency Stay by which said Order the Court authorized the County to spend the occupational tax revenue received by the County between the date of the Order of January 12, 2009, and May 18, 2009, the last day of the Legislative Session. The Order further provides, however, that... by allowing the expenditure of said tax revenue this Court does not alter, amend, change, or diminish the requirement for the County to repay or refund same to the taxpayers from whom they were received should the County be unsuccessful in its appeal in this case.

5 Page 5 On May 28, 2009, the County filed another request to be allowed to spend the occupational tax revenues as received. The County's request was denied by this Court's Order of June 4,2009, in which said Order the County was reminded: The Order of January 12, 2009, declares that the "escrow funds shall be deemed the funds of the respective taxpayers and not the property or assets of the County pending further orders of the Court." In the March 20, 2009, Order Regarding Escrow of Funds the Court stated that the "authorization for said funds to be maintained in the County's Operating Account does not alter, amend, or diminish the status of said funds as the assets, properties, or monies of individual taxpayers and businesses for whom same are paid or remitted to the County. Notwithstanding the Court's repeated statements that the escrowed tax revenues in question are, and continue to be, the property or assets of the taxpayers from whom they were withheld, the County contends that this Court's finding has been rendered moot by the Legislature's enactment of Act which said Act purports to retroactively validate the taxing authority of Act Article IV Section 95 of the Alabama Constitution is clear and unambiguous: After suit has been commenced on any cause of action, the Legislature shall have no power to take away such cause of action, or destroy any existing defense to such suit.

6 Page 6 Notwithstanding this i~nqualified Constitutional prohibition, the appellate courts of this state have limited the applicability of said prohibition to those cases in which one's vested rights are at issue: If a right of action is the product of a statute, it can e modified, limited, or repealed as the legislature sees fit; except as to causes of action which already have accrued. A right of action created by the legislature, which are not effective as a contract, do not become vested by a suit to enforce them until a judgment has been rendered. (Citations omitted.) Charles W. Gamble and Donald E. Corley, Alabama Law of Damanes The County argues, therefore, that the taxpayers in the instant case did not have a vested right to a refund of taxes at the time of the enactment of Act 'The taxpayers argue, however, that their rights were vested by this Court's judgment of January 12, 2009, and that Act therefore violates Section 95 of the Alabama Constitution. According to the parties' articulation of the issue if the taxpayers had a vested right to a refund, then the Legislature had no Constitutional authority to abolish that right by the enactment of Act If the taxpayers did not have a vested right to a refund, then, the Legislature did have the Constitutional authority to enact a retroactive validation of Act and the taxes imposed thereunder. During oral argument on September 28, 2007, before this Court, counsel for the County stated:

7 Page 7 And just, candidly, the Legislature and I've played a game of chicken, Your Honor, which was probably very dangerous there because if you look at the Alabama Constitution, you can cure problems, as this was going to do retroactively, provided that vested rights are not implicated. And it is the clear intention of the Legislature to cure them retroactively. So, if the Legislature and the county had gotten together and passed a retroactive act before this lawsuit was filed, it would have precluded the bringing of this lawsuit. Well, once this lawsuit was filed, you could not cure the problem retroactively by legislation. In a submission to the Alabama Supreme Court the County stated: [Clonsider the hypothetical situation if the Legislature had responded on the last day of the session and passed a replacement tax. Such legislation would presumably have obviated both the right and the need of the County to collect the Act Taxes thereafter, but such legislative action could not have affected the legal status of the taxes levied since January 12, 2009, that would still be pending on appeal. The rights of the Plaintiffs with respect to those taxes would be vested and protected from legislative intervention by Section 95 of The Alabama Constitution. The County claims that Ballenqer Construction Co. v. State Board of Adjustment, 175 So. 387, 234 Ala. 377 (1937) "neatly defines" what a vested right is for purpose of a Section 95 analysis. In Ballenger a highway paving contractor filed a claim for payment with the State Board of Adjustment. After the Board of Adjustment declined to hear the claim, the contractor filed a petition for writ of mandamus seeking to have the circuit court compel the Board to hear and decide same. During the pendency of the suit the Legislature enacted an Act limiting the

8 Page 8 authority of the Board of Adjustment, and thereby excluding the contractor's claim for consideration by the Board. On appeal in Ballenner the Court opined that: A right of action created by statute is not vested by the institution of a suit. Rights created by the Legislature which are not effective as a contract do not become vested by a suit to enforce them until a judgment has been rendered. At the hearing of the County's "Mootness" motion on December 22, 2009, the County acknowledged that the Ballen~er case does not so "neatly define" the meaning of vested rights, and this Court has found no other definitive authority to aid this Court in understanding this othetwise judicially invented term. Indeed, this Court has been cited no case which defines a vested right of a taxpayer. At the time the Legislature enacted Act on August 14, 2009, this Co~~rt had already entered a final judgment dictating the right of the taxpayers to a refund of taxes assessed under Act In order to protect the County from the loss of tax revenue should the County prevail on appeal, and in order to protect the taxpayer from being unable to collect their refunds should they prevail on appeal, the County was authorized to continue to collect and hold same pending further orders of the Court.

9 Page 9 The County has never argued that the taxpayers' right to a refund was not a vested right merely because the taxpayers' right to a refund was subject to appeal. The County has not argued that this contingency prevented the taxpayers' right to a refund from being vested on January 12, This Court is well satisfied that the rights of the taxpayers to a refund was fixed by the Order of January 12, 2009, and the Supreme Court affirmance validates the finality of this finding. The enactment of Act does not render moot the Order of January 12, 2009, and Act does not render moot the taxpayers' vested right to a refund of taxes as provided by said Order. II. Corpus of Settlement Fund On August 26,2009, the Plaintiffs filed a Motion For Release of Escrow Funds seeking to have the escrowed tax revenues received from May 18, 2009, until August 14, 2009, transferred to a trust account to be maintained by the Plaintiffs' attorneys pending further orders of the ~ ourt.~ During a conference call with the attorneys on August 26, this court determined that the parties needed to conduct post appeal discovery in order to develop a plan for refunding the taxes in question. Accordingly, no action was taken on the Plaintiffs Motion For Release of Escrow By this Court's Order of March 20,2009, the County was authorized to spend the occupational taxes received between January 12,2009 and May 18,2009. The County thereafter deposited occupational taxes in a Court ordered escrow account as received.

10 Page 10 Funds pending the deposition of Travis Hl.~lsey, the Col.~nty's Acting Director of Finance. On October 22, 2009, the Plaintiffs filed a Motion To Establish a Qualified Settlement Fund and Appoint A fund Administrator for the purpose of administering tax and business license refunds. The Plaintiffs nominated Mr. Edgar C. Gentle, Ill for appointment as Fund Administrator. At a hearing on November 20, 2009, the Defendant's attorney, Mr. William M. Slaughter, stated, in part, as follows:... we really have no objection to having the money transferred to a qualified fund that is under somebody else's custody. With on caveat. We do not want the money disbursed without [the Court's] approval or pursuant to [the Court's] order and in connection with the whole scheme when and where it is to be implemented. Mr. Gentle, the nominee for appointment as Fund Administrator, was thereafter directed to prepare a case specific proposal for the administration of the Settlement Fund. Mr. Gentle's formal proposal was filed on December 2, 2009, and a hearing was conducted for review of same on December 4,2009. At the hearing on December 4, 2009, the County conceded that if the Court accepts the County's calculation of the amount to be properly included in said Fund, the said Fund would include $37,796, Without determining whether said Fund should include any additional amount, the County was ordered to

11 Page 1 I transfer the amount of $37,796, to Mr. Edgar C. Gentle, Ill as Fund Administrator. The Plaintiffs argue that the corpus of said Settlement Fund should be $47,812, and that the County should make the necessary additional transfer to the Fund Administrator. On December 11, 2009, the County filed its Motion To Clarify Escrow Period by which said Motion the County argues that the Settlement Fund should only consist of taxes withheld from employees earnings after January 12, 2009, rather than taxes received by the County after January 12,2009. According to the County's calculation the Court should set the size of the Settlement Fund at $37,796, rather than $47,812, as claimed by the Plaintiffs. The Order of January 12, 2009, is clear and unambiguous: "...the disputed tax revenue collected hereafter should be placed in an escrow account pending the results of an appeal." (Emphasis added.) On June 4,2009, this Court stated: Occupational Taxes referable to each calendar month are collected by the County beginnirlg with their receipt about the 2oth of each subsequent calendar month, and are held in the County's operating account until the loth of the following calendar month, at which time they are distributed to the County Treasurer for payment of payroll and accounts payable. In keeping with this pattern, taxes collected for the month of December 2008, were received after the Order of January 12, The taxes for April 2009, were not collected by the County until after the May 18,2009, expiration of the Emergency Stay.

12 Page 12 The taxes collected for December 2008, and for January, February, and March 2009, have been spent by the County pursuant to this Court's March 20, 2009, Order Regarding Escrow of Funds. 'The County is not authorized to spend the taxes received for April 2009, and subsequent months unless this Court or the Supreme Court extends the stay. It is clear that the corpus of the Settlement Fund is the amount of taxes received by the County between January 12,2009, and August 14,2009, and that the amount so received by the County is $47,812, It is this amount which the County must, therefore, transfer to the Fund Administrator to establish the corpus of the Settlement Fund. The Order of December 10, 2009, required the County to pay the Fund Administrator $37,796, pending further orders of the Court. By memorandum from the Fund Administrator on December 18, 2009, the Court was advised that the County has only transferred the sum of $23,034, Accordingly, the corpus of the Settlement Fund is underfunded by $24,777, On December 21,2009, the County advised the Court and opposing counsel that the County intended to make a transfer that day or the next for the purpose of bringing the Settlement Fund deposit to $37,796, as required by the Order of December 10, Once the County has made this transfer, the corpus of the Settlement Fund will remain underfunded by $10,016,

13 Page 13 The County must also transfer to the Settlement Fund all interest earned on the escrow deposits from January 12, 2009, until the transfer of same to the Settlement Fund. Ill. Post Judgment Interest ALA. CODE provides as follows: Judgments for the payment of money, other than costs, based upon a contract alone, bear interest from the day of the cause of action, at the same rate of interest as stated in said contract; all other judgments shall bear interest at the rate of 12% per annum, the provisions of notwithstanding, provided that these allowed a trustee, executor, administrator, or attorney, and taxed as part of the cost of the proceeding, shall bear interest at a like rate from the day of entry. The Plaintiffs argue, therefore, that the occupational tax collections from January 12, 2009, until August 14, 2009, should bear interest at the rate of 12% per annum. The County argues that no post judgment interest accrues until the amount of the judgment is fixed by the Court. On January 13, 2009, and February 11, 2009, the Plaintiff's filed motions seeking to have the County provide an accounting for all taxes received and escrowed pursuant to the Order of January 12, On March 20, 2009, this Court entered an order requiring the County to provide the Plaintiff's attorneys a

14 Page 14 certified report of the taxes received by the County during the preceding tax reporting period. Based on the County's reports of taxes received during the period in question this Court finds that the County has deposited $37,796, Although this Court has herein above found that the County underreported the total taxes received during the period from January 12, 2009, until August 14, 2009, the amount owed by the County to the taxpayers became fixed in an amount no less than the amount reported each month. This Court understands that the Plaintiffs' calculation of post judgment interest is based on the total amount which this Court has found should have been reported by the County, rather than the amount as reported. The Plaintiffs should recalculate post judgment interest on the amount as reported. Post judgment interest is deemed to accrue on the reported amount from January 12, 2009, until the date of this Order. Post judgment interest shall hereafter accrue on the higher amount owed by the County to the taxpayers as found by the Court in Section II of this Order. It is this Court's understanding that while the County held the subject taxes in escrow, the deposits earned interest in the amount of $201, through December 8, This interest earned on the escrow deposits should be transferred by the County to the corpus of the Settlement Fund, but said escrow

15 Page 15 interest may be deducted from the post judgment interest to be calculated as provided for herein. IV. CONCLUSION On the basis of the findings of this Court, whether set out herein or not, it is ORDERED, ADJUDGED and DECREED as follows: 1. The County's November 10, 2009, Motion To Dissolve Injunction, Vacate Escrow Order, Release Escrowed Funds To Jefferson County General Fund, and Moot Plaintiff's Motions To Disburse Funds and To Establish Qualified Settlement Fund is hereby DENIED. 2. The Corpus of the Settlement Fund is hereby fixed at $47,812,627.95, plus accrued escrow interest and post judgment interest to be calculated in accordance with this Order. The county shall make the necessary transfer of funds to the Settlement Fund within 15 days from the date of this Order. 3. Post judgment interest is deemed to have accrued on the sum of $37,796,302.06, as received by the County from January 12, 2009 until the date of this Order. The post judgment interest calculated thereon as provided for herein shall be reduced by the escrow interest earned and deposited by the County in the corpus of the Settlement Fund.

16 Page 16 DONE this day, a December David A. Rains, Circuit Judge COPY TO: Sam Hill E. Allen Dodd James McFerrin Attorney for - Plaintiff - Jessica Edwards Janet Judge Alarm One, Inc. Willlam M. Slaughter Mark D. Hess James W. Porter, Ill Robert M. Lichenstein Thomas L. Stewart Robert M. Rosenberg Defendants - -Jefferron County Commission Bettye Fine Collins Travis Hulsey J. T. Smallwood Defendant - Birmingham Jefferron Civic Center Authority Honorable Anne-Marie Adams Circuit Clerk of Jefferron County