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Employers Resource Management Company v. Ronk

Supreme Court of Idaho

November 3, 2017

EMPLOYERS RESOURCE MANAGEMENT COMPANY, an Idaho Corporation, Plaintiff-Appellant,
MEGAN RONK, in her capacity as Director of the Idaho Department of Commerce, Defendant-Respondent.

         2017 Opinion No. 108

         Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Samuel Hoagland, District Judge.

         The judgment of the district court is vacated and remanded for further proceedings.

          Eberle, Berlin, Kading, Turnbow & McKlveen, Chartered, Boise, for appellant. Neil D. McFeeley argued.

          Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent. Carl J. Withroe argued.

          HORTON, JUSTICE.

         This is an appeal from the district court's dismissal of Employers Resource Management Company's ("Employers") complaint for declaratory relief for lack of standing. We reverse and remand for further proceedings.


         In 2014, the Idaho Legislature passed the Idaho Reimbursement Incentive Act ("IRIA"). IRIA is intended to create incentives for businesses to move to Idaho or to significantly increase their workforces by way of a subsidy in the form of a refundable tax credit. IRIA authorizes the Department of Commerce to provide a business with a refundable tax credit for up to 15 years and up to 30% of the new revenue Idaho receives from the company's corporate income tax, payroll taxes, and sales and use tax attributable to a new project. I.C. § 67-4740. The benefits of IRIA are available to both new and existing businesses in any industry with a competitive project that adds a minimum of 20 new full-time, non-seasonal jobs in rural areas (50 new jobs in urban areas) that pay an average wage that equals or exceeds the wage for the county where the business is located. I.C. § 67-4738(11), (12).

         A business seeking the credit must apply to the Director of the Idaho Department of Commerce ("the Director"). I.C. § 67-4739. Among the requirements that the applicant must satisfy is "proof of a community match." I.C. § 67-4739(1)(c). The applicable local government unit must demonstrate "active support of the applicant, " which may include "a contribution of money, fee waivers, in-kind services, the provision of infrastructure, or a combination thereof." I.C. § 67-4738(5).

         The Director conducts a technical review and economic impact analysis of each application. IDAPA After the Director determines that the application meets the requirements of IRIA, the application is forwarded to the Economic Advisory Council ("the EAC"), a body created under authority of Idaho Code section 67-4704. The EAC reviews the application and may require that additional information be provided before approving or rejecting the application. I.C. § 67-4739. If the application is approved, the Director enters into an agreement with the applicant consistent with the terms of the EAC's approval. I.C. § 67-4739(3). The EAC is given broad discretion to approve or deny applications for the IRIA tax credit.

         In 2016, the EAC granted a tax credit of $6.5 million to Paylocity, an Illinois corporation. Employers' complaint alleged that this tax credit was a governmental subsidy to Paylocity that would give it a competitive advantage over Employers. Employers challenged the IRIA program as unconstitutional, alleging that the Legislature unconstitutionally delegated its authority over tax matters to the Executive Branch.

         Ronk moved to dismiss Employers' complaint pursuant to Idaho Rule of Civil Procedure 12(b)(6), asserting that Employers lacked standing because nothing done by the EAC was directed at Employers. Ronk further contended that Employers' allegation of competitor standing was insufficient because there was only conjectural proof of injury. The district court granted the motion to dismiss, holding that Employers did not have a protectable interest in its competitive position in the marketplace. The court also found that the harm Employers alleged that it would suffer was "abstract and speculative." Thus, the district court concluded that Employers did not have standing. Employers timely appealed from the district court's judgment dismissing the action.


         The district court dismissed Employers' complaint pursuant to Idaho Rule of Civil Procedure 12(b)(6). In a decision issued subsequent to the district court's decision, we clarified that justiciability challenges, including those related to standing, "are subject to Idaho Rule of Civil Procedure 12(b)(1) since they implicate jurisdiction." Tucker v. State, 162 Idaho 11, 18, 394 P.3d 54, 61 (2017). Despite the different applicable rule, our standard of review is the same. This is because:

There is a distinction between 12(b)(1) facial challenges and 12(b)(1) factual challenges. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir.1990); 5B [Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure], § 1350 [3d ed. (2004)]. Facial challenges provide the non-movant the same protections as under a 12(b)(6) motion. Id. Factual challenges, on the other hand, allow the court ...

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