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Hendershot v MDARD Director

Background

Please fully read this material. You need not take action at this time but you may wish to contact the law firm.

Two Minute Explainer - Michigan Propane Tax Class Action Lawsuit

On August 11, 2024, the law firm of Outside Legal Counsel filed a class action lawsuit on behalf of Michigan consumers seeking to halt an illegal special assessment (i.e. tax) being collected from Michigan's retail propane marketers (i.e. those who fill the propane pigs in the yards of businesses and homeowners) to fund industry-backed marketing programs.

In 2020, the Michigan Legislature passed Public Act 332, known as the Propane Commission Act. This statute created the Michigan Propane Commission who is tasked with the responsibility of educating residents, business owners, and other users of propane on the safe use of propane, and promoting the use of high efficiency appliances and equipment through rebate and incentive programs for Michigan residents. The Legislature apparently did not want to use regular tax dollars so it empowered "retail propane marketers" to determine whether the price of propane would be subject to an assessment (code word for tax) of one-tenth of one cent per gallon of odorized propane sold or placed into commerce.

The vote on this proposal (or what it calls a "referendum") was handled by the Michigan Director of Agriculture and Rural Development. Each of the 119 Michigan retail propane marketers received one vote.

The law in Michigan is crystal clear -- "passage of the referendum requires more than 50% of the votes of all of the retail propane marketers with customers in this state." In other words, 60 of the 119 Michigan retail propane marketers.

The vote was held in early 2021 and sixty-five ballots were returned. Only 49 marketers voted in favor (16 voted no and 54 did not vote at all). Because requisite vote failed, the law required the Michigan Propane Commission "to recommend repeal of the Propane Commission Act" to the Michigan Legislature. That apparently did not sit well with some. So, then MDARD Director Gary McDowell suggested that "all" meant only all those who voted, not all retail propane marketers. As mistakenly stated in a document called an opinion and order (which is not a real thing), he proclaimed "75 percent of the retail propane marketers voted yes to establish the initial assessment of the Michigan Propane Commission, whereas 25 percent of the retail propane marketers voted no on the initial assessment." But that is just not true. 49 of 119 is 41%, not 75%.

With this skewed misinterpretation, those in charge of the Michigan Propane Commission demanded the start of collection of that per-gallon tax rather than recommend repeal of the program as the law requires.

On August 11, 2024, Outside Legal Counsel filed a lawsuit against the Director of Michigan Department of Agriculture and Rural Development and the Michigan Propane Commission. The lawsuit seeks to halt the program as being illegally operated and a refund of the vast sums collected that were ultimately charged to Michigan consumers.

Class Actions

What is this class action all about?

A class action lawsuit consolidates similar or identical claims of many people into a single lawsuit against one or several defendants. Class actions are cost effective ways of resolving many legal disputes that have a lot in common.

In a typical class action, a plaintiff sues a defendant or a number of defendants on behalf of a group, or class, of absent parties. This differs from a traditional lawsuit, where one party sues another party for redress of a wrong, and all of the parties are present in court. Instead of each person bringing his or her own individual lawsuit by an individual lawyer, the class action allows all the claims of all class members — whether they know they have been damaged or not — to be resolved in a single proceeding through the efforts of the representative plaintiff(s) and appointed class counsel.

A class action attorney helps initiate and handle a class action, and advocates for the Class and argues against the sued governments and their officials and attorneys in court. Class action attorneys are generally paid a percentage of the money that is recovered on behalf of the Class. All attorney fees must be reviewed and approved by the court.

FAQs

What is a Class Action?

    A class action suit occurs when, with court approval, many different people's similar complaints are combined in a single action represented by a lead plaintiff or class representative who suffered a similar wrong. This saves court time and allows a single judge to hear all legal claims at the same time, and come to one judgment or settlement for all members of the class. Many times, members of the class can get a favorable outcome without having to participate in the day-to-day litigation obligations.

Who is eligible to participate in the final outcome?

    In this case, a class is being pursued to vindicated the rights of consumer propanel purchasers. The court has not yet defined scope of or certified any class.

Who is the Lead Plaintiff / Class Representative?

    Currently, Matthew Hendershot is the named lead plaintiff and proposed class representative, but others may be added. At the request for class counsel, the court reviews and appoints a Class Representative to prosecute the lawsuit on behalf of the members of the Class. An individual plaintiff, a group of individuals or other entity can serve as a Class Representative. The court has not yet named a class representative.

Who is Class Counsel?

    The court has not yet named class counsel.

What do I need to do to be part of the class?

What are the Costs and Expenses for me?

    Costs and Expenses of the lawsuit are usually advanced by the law firms prosecuting on behalf of the Class. The class counsel works on a contingent fee basis. That means Class Counsel will ask the court to award reimbursement of the out-of-pocket expenses and attorneys’ fees -- usually a percentage of the total recovery -- but upon being successful.

Contact

You can contact us directly at:

    Law Office of Outside Legal Counsel PLC
    PO Box 107
    Hemlock, MI 48626
    (989) 642-0055

Official Class Action Website of Hendershot v MDARD Director