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U.S. Supreme Court

American Trucking Ass'ns v. Smith, 496 U.S. 167 (1990)

American Trucking Associations, Inc. v. Smith

No. 88-325

Argued March 22, 1989

Reargued Dec. 6, 1989

Decided June 4, 1990

496 U.S. 167


In 1983, petitioners brought suit in an Arkansas Chancery Court, alleging that the flat tax portion of that State's Highway Use Equalization (HUE) tax discriminated against interstate commerce in violation of the Commerce Clause by imposing on out-of-state truckers greater per-mile costs than those imposed on in-state truckers, who are likely to drive many more miles on the State's highways. Petitioners sought a refund of all HUE taxes paid. In affirming the Chancery Court's ruling that the tax was constitutional, the State Supreme Court relied on this Court's decisions upholding flat taxes in Capitol Greyhound Lines v. Brice, 339 U. S. 542, Aero Mayflower Transit Co. v. Board of Railroad Comm'rs of Montana, 332 U. S. 495, and Aero Mayflower Transit Co. v. Georgia Public Service Comm'n, 295 U. S. 285, and explicitly rejected petitioners' argument that Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, overruled the Aero Mayflower line of cases. On June 23, 1987, this Court ruled, in American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266, that unapportioned flat highway use taxes penalize travel within a free trade area among the States in violation of the Commerce Clause. Subsequently, this Court vacated the Arkansas Supreme Court's judgment and remanded the case for further consideration in light of Scheiner. After that court denied petitioners' motion seeking, inter alia, an order to escrow the HUE taxes to be collected pending a final decision on the merits, Justice BLACKMUN, as Circuit Justice, ordered such an escrow on August 14, 1987. The State Supreme Court then reconsidered the HUE tax in light of Scheiner and ruled it unconstitutional. However, the court declined to order refunds for taxes paid before the August escrow order, holding that, under the test enunciated in Chevron Oil Co. v. Huson, 404 U. S. 97, 404 U. S. 106-107, Scheiner should not be applied retroactively. The court nevertheless determined that the tax money paid into escrow after the August order should be refunded.

Held: The judgment is affirmed in part and reversed in part, and the case is remanded.

295 Ark. 43, 746 S.W.2d 377, affirmed in part, reversed in part, and remanded.

Page 496 U. S. 168

Justice O'CONNOR, joined by THE CHIEF JUSTICE, Justice WHITE, and Justice KENNEDY, concluded that the Arkansas Supreme Court misapplied Chevron Oil in certain respects and, therefore, Scheiner applies to some taxation of highway use pursuant to the HUE tax. Thus, the case must be remanded to that court to determine appropriate relief in light of McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dept. of Business Regulations of Fla., ante, p. 496 U. S. 18. Pp. 496 U. S. 176-200.

(a) Whether the State Supreme Court applied Chevron Oil correctly is a federal question. However, it is important to distinguish that question from the distinct remedial question at issue in McKesson, ante. While the relief provided by the State from a tax statute held invalid under the Commerce Clause must be in accord with federal due process principles, see ante at 496 U. S. 36-43, 496 U. S. 51-52, federal-state comity dictates that state courts have the initial duty of determining appropriate relief. Pp. 496 U. S. 176-179.

(b) Under Chevron Oil's three-factor nonretroactivity test, Scheiner does not apply to taxation of highway use prior to the date it was decided, June 23, 1987, for the HUE tax year ending June 30, 1987. First, Scheiner clearly established a new principle of law by expressly overruling those aspects of the Aero Mayflower line of cases on which Arkansas relied in enacting and assessing the HUE tax. In its original decision upholding the tax, the State Supreme Court correctly followed the Aero Mayflower cases rather than Complete Auto Transit, since the latter case only questioned the Aero Mayflower line, and this Court cited that line with approval in a decision subsequent to Complete Auto Transit, Massachusetts v. United States, 435 U. S. 444, 435 U. S. 463-464. Second, the purpose of the Commerce Clause does not dictate retroactive application of Scheiner, since such application would not tend to deter future free trade violations by the States. The HUE tax when enacted was entirely consistent with the Aero Mayflower cases, and it is not the Clause's purpose to prevent legitimate state taxation of interstate commerce. Third, applying Scheiner retroactively would produce substantial inequitable results. Especially in light of McKesson's holding that a ruling that a tax is unconstitutional under the Commerce Clause places substantial obligations on the States to provide relief, invalidating the HUE tax has the potential for severely burdening the State's current operations and future plans. A refund, if required, could deplete the state treasury and entail potentially significant administrative costs, while retroactively increasing taxes on the favored taxpayers would also entail such administrative costs, and could at some point run afoul of the Due Process Clause under McKesson, ante, at 496 U. S. 40-41, n. 23. Where a State can easily foresee the invalidation of its tax statutes, the burden on state operations may merit little concern. See McKesson,

Page 496 U. S. 169

ante, at 496 U. S. 44-46, 496 U. S. 50. It is unjust, however, to impose this burden when the State relied on valid existing precedent in enacting and implementing its tax. Pp. 496 U. S. 179-186.

(c) However, the conclusion that Scheiner applies only prospectively does not protect those HUE taxes paid to the State for the tax year beginning July 1, 1987. The State Supreme Court's refusal to order refunds for any 1987-1988 HUE taxes paid prior to Justice BLACKMUN's escrow order arose from a misapprehension of the force of Chevron Oil. Scheiner applies prospectively to the flat taxing of highway use after the date of that decision, regardless of when the taxes for such use were actually collected. Holding otherwise would result in similarly situated taxpayers receiving different remedies depending solely and fortuitously on the date they paid the tax. Pp. 496 U. S. 186-188.

(d) The dissent's criticisms of this decision lack merit. First, the claim that this decision is unjust because it treats the taxpayers in this case differently from those in Scheiner is unpersuasive, since this case resolves a retroactivity question not considered in Scheiner, which was concerned only with a state court's ruling on the constitutionality of certain tax statutes and remanded for a determination of retroactivity and remedial issues. Second, the claim that this Court has consistently applied new decisions retroactively to civil cases which are pending on direct review is an inaccurate characterization, since a review of the Court's decisions shows that it has consistently applied the principles underlying the retroactivity doctrine enunciated in Chevron Oil rather than the approach suggested by the dissent. See, e.g., Cipriano v. City of Houma, 395 U. S. 701. Third, contrary to the dissent's assertion, this Court has never equated its retroactivity principles with remedial principles, but has instead considered nonretroactivity to be a doctrine for determining when past precedent should be applied to a case before the Court. As such, it is better understood as part of the doctrine of stare decisis, rather than part of the law of remedies. See, e.g., Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U. S. 358, 287 U. S. 364. Finally, the reasons for adopting a per se rule of retroactivity in criminal cases, see Griffith v. Kentucky, 479 U. S. 314 -- primarily, to provide expanded procedural protections to criminal defendants -- are not applicable in the civil sphere, where nonretroactivity functions to avoid injustice or hardship to civil litigants who have justifiably relied on prior law, see, e.g., Chevron Oil, supra, 404 U.S. at 404 U. S. 107. These distinctions compel the rejection of the dissent's invitation to abandon the nonretroactivity doctrine in the civil arena as the Court did in the criminal arena. Pp. 496 U. S. 188-120.

Justice SCALIA concluded that prospective decisionmaking by the Court cannot be reconciled with the scope of the judicial power under

Page 496 U. S. 170

Article III. Nonetheless, because this Court's so-called "negative" Commerce Clause jurisprudence has no basis in the text of the Commerce Clause, see, e.g., American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266, 483 U. S. 303-306 (SCALIA, J., concurring in part and dissenting in part), and because Scheiner was therefore wrongly decided, the only reason to apply Scheiner is the doctrine of stare decisis. The purpose underlying that doctrine, which is to protect settled expectations, justifies holding that Arkansas violated the Constitution in imposing its HUE tax after Scheiner was announced, but does not justify holding that Arkansas violated the Constitution in imposing its HUE tax before Scheiner overruled our earlier cases on which Arkansas presumably relied. To apply Scheiner retroactively, solely in the name of stare decisis, would turn the purpose of stare decisis against itself. Accordingly, the decision below should be affirmed with respect to the pre-Scheiner taxes, and reversed with respect to the post-Scheiner taxes. Pp. 496 U. S. 200-205.

O'CONNOR, J., announced the judgment of the Court and delivered an opinion in which REHNQUIST, C.J.,and WHITE and KENNEDY, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment, post, p. 496 U. S. 200. STEVENS, J., filed a dissenting opinion in which BRENNAN, MARSHALL, and BLACKMUN, JJ., joined, post, p. 496 U. S. 205.

Page 496 U. S. 171

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