Title: TVKO v. Howland

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed:  July 24, 2003
IN THE SUPREME COURT OF THE STATE OF OREGON

TVKO,
a subdivision of Home Box Office,
a division of Time Warner Entertainment Company, L.P.,
a Delaware limited partnership,
	Appellant,
	v.
LERON R. HOWLAND,
Superintendent of the Oregon Department of State Police;
ADOLFO AKIL, ARTHUR W. CREWS,
FRANK J. PEDROJETTI, F. LOUIS RIOS, M.D.,
and GREGORY A. SMITH,
Members of the Oregon State Boxing 
and Wrestling Commission,
	Respondents.
(OTC 4445; SC S48926)

	On appeal from the Oregon Tax Court.*
	Carl N. Byers, Senior Judge.
	Argued and submitted May 7, 2003.
	William F. Gary, of Harrang Long Gary Rudnick PC, Salem,
argued the cause for appellant.  With him on the briefs were
James E. Mountain, Jr., and Bernard Nash and Maria Colsey Heard
of Dickstein Shapiro Morin & Oshinsky LLP, Washington D.C.
	Robert M. Atkinson, Assistant Attorney General, Salem,
argued the cause for respondents.  Stephen K. Bushong and
Christina M. Hutchins, Assistant Attorneys General, and Hardy
Myers, Attorney General, and Mary H. Williams, Solicitor General
filed the briefs for respondents.
	Neil D. Kimmelfield, of Ball Janik LLP, Portland, filed a
brief on behalf of amicus curiae Oregon Cable Telecommunications
Association.
	Before Carson, Chief Justice, and Gillette, Durham, Riggs,
De Muniz, and Balmer, Justices.
	DE MUNIZ, J.
	The judgments of the Tax Court are affirmed.
	*15 OTR 335 (2001), 15 OTR 402 (2001).
		DE MUNIZ, J.
	This case began in the Oregon Tax Court as an action
for a declaratory judgment.  The central issue involves the
constitutionality of a particular tax that the State of Oregon
levied on certain pay-per-view telecasts that plaintiff
broadcast.  The Tax Court ruled in plaintiff's favor on that
underlying issue, and the correctness of that ruling is not
before us.  Instead, plaintiff asks this court to decide two
ancillary issues:  (1) whether the Tax Court improperly limited
the declaratory relief that it afforded plaintiff and (2) whether
that court improperly denied plaintiff's motion for attorney fees
and costs.  ORS 305.445.  For the reasons that follow, we affirm
the Tax Court's judgments.  
	Plaintiff TVKO is a subdivision of Home Box Office
(HBO) that produces and distributes televised pay-per-view
sporting events through local cable operators.  Defendants are
the Superintendent of the Oregon State Police and the members of
the Oregon Boxing and Wrestling Commission who, together in their
official capacity, administer the statutes regulating
professional boxing and wrestling in Oregon. (1)
	In March 1999, plaintiff broadcast a pay-per-view
boxing match from New York City and distributed the program to
cable operators across the country.  In Oregon, the event
generated 4,804 subscription orders.  In accordance with ORS
463.320(3), (2) the commission demanded that plaintiff pay a gross-receipts tax of $14,450.46 on the event.
	Plaintiff declined to pay the tax and brought an action
under the Uniform Declaratory Judgments Act, ORS 28.010 to
28.160, and 42 USC section 1983, seeking declaratory and
injunctive relief.   Plaintiff moved for summary judgment
arguing, inter alia, that the state's tax violated plaintiff's
First Amendment free speech rights.
	The Tax Court agreed with plaintiff.  Although it
acknowledged that the state had a legitimate interest in
regulating boxing matches in Oregon, the court held that the
statute at issue did more than that:  it regulated the
dissemination of images reproduced from boxing matches.  What the
state sought to tax, the court concluded, was not the event
itself, but communications of and about the event.  
	The Tax Court then took issue with defendants' argument
that the tax was constitutional because it did not raise revenue
for the general fund, but "instead[,] pa[id] for the regulation
of the industry in which taxpayer [did] business."  The court
concluded:
	"Defendants err in failing to recognize that
[plaintiff] is not in the business of promoting boxing
or wrestling matches in Oregon.  Defendant's own brief
asserts: 
			"'Plaintiff, however, has never
broadcast an event from Oregon, has not
alleged that it plans to broadcast an event
from Oregon, has not held a production
meeting in Oregon, and does not allege that
it plans to hold any production meetings in
Oregon.'
		"Thus by Defendant's own assertions, [plaintiff's]
only connection with Oregon is selling or transmitting
television images and sound of a boxing match that took
place outside of Oregon.  Clearly, Oregon has no
jurisdiction to regulate boxing matches held outside
the state."
TVKO v. Howland, 15 OTR 335, 345-46 (2001) (emphasis in
original).
		Ultimately, the Tax Court granted plaintiff's summary
judgment motion, in part, stating:
		"In summary, a tax imposed on television
transmissions of boxing matches held outside of Oregon
violates the First Amendment of the United States
Constitution.  Boxing matches that take place in New
York, the Phillippines, or Africa are clearly beyond
Oregon's jurisdiction to regulate.  The televising of
such a boxing match is not promotion of boxing, subject
to regulation by Oregon.  The state's imposition of a
tax on such can only be intended to regulate
communication, something the state may not do in the
absence of a compelling interest.  It has shown no such
interest."
Id. at 346 (emphasis added). 
		Both parties subsequently submitted proposed forms of
the final declaratory judgment.  Plaintiff's version broadly
worded the judgment and, in effect, declared the tax to be
unconstitutional vis-à-vis any pay-per-view boxing or wrestling
event seen in Oregon:
		"The provisions of ORS 463.320, subsections (3),
(4), and (5), that impose a gross receipts tax on
telecasts of boxing or wrestling events are
unconstitutional, in violation of the First Amendment
to the United States Constitution, applicable to
defendants through the Fourteenth Amendment[.]"
In contrast, defendants offered a narrowly drawn version that
applied to only out-of-state broadcasts, such as the one
transmitted by plaintiff giving rise to this case:
		"The provisions of ORS 463.320 that impose a
gross-receipt tax on telecasts or transmissions of only
out-of-state boxing or wrestling events are
unconstitutional, in violation of the First Amendment
to the United States Constitution applicable to
defendants through the Fourteenth Amendment, and not
enforceable."
(Emphasis added.)  The Tax Court entered defendants' proposed 
judgment.
As the prevailing party, plaintiff moved for attorney
fees and costs, relying on ORS 182.090 (3) as well as on the
inherent equitable power of the Tax Court.  Plaintiff argued that
the state unreasonably had sought to enforce the tax because the
statute was unconstitutional on its face and courts elsewhere had
declared "virtually identical statutes" unconstitutional. 
Plaintiff also argued that the court should exercise its power in
equity to award fees and costs because plaintiff had acted to
"vindicate vitally important free speech rights of all
telecasters and Oregonians."  
		The Tax Court denied plaintiff's motion.  It 
acknowledged that state agencies do have authority to question
the constitutionality of statutes.  The court noted, however,
that defendants in this case had conferred with the Oregon
Department of Justice (DOJ) before continuing their enforcement
efforts and that DOJ had advised them that the tax was
constitutional.  Citing State v. Mott, 163 Or 631, 640, 97 P2d
950 (1940), the Tax Court concluded that state officers were
"entitled to follow the opinions of the Attorney General and,
when acting in good faith, will be protected, even though that
opinion may be in error."  TKVO v. Howland, 15 OTR 402, 408
(2001).
Regarding its equitable power to award fees, the Tax
Court determined that, under Armatta v. Kitzhaber, 327 Or 250,
287, 959 P2d 49 (1998), three conditions must exist before such
an award is warranted:  (1) the proceeding must be one in
equity; (4) (2) the party requesting fees must be the prevailing
party; and (3) the party must have sought to vindicate a
constitutional right applying to all citizens without any gain
peculiar to itself.  Applying that rule to plaintiff, the Tax
Court concluded:
		"It is the element of self interest that
disqualifies TVKO here.  TVKO contested licensing and
tax provisions that only apply to those who promote a
boxing or wrestling match.  The benefits of the court's
decision flow largely to TVKO and other members of its
industry, while the public is only indirectly
benefitted.  * * *  If the interest that a litigating
party seeks to vindicate is 'individualized,'
'peculiar,' or 'pecuniary,' it will not qualify as the
type of interest justifying an award of attorney fees
under the [equitable principles contained in Deras v.
Myers, 272 Or 47, 535 P2d 541 (1975)]. * * *
Accordingly, TVKO is not entitled to an award of
attorney fees under the court's inherent equitable
powers."
TVKO 15 OTR at 410.  This appeal by plaintiff followed.
	Plaintiff argues that, in declaring the tax levied
against it under ORS 463.320(3) unconstitutional, the Tax Court
committed legal error in limiting that declaration to taxes on
telecasts of out-of-state boxing and wrestling events.  Plaintiff
asserts that the parties argued the case in the Tax Court as a
facial challenge to the statute, the court analyzed it as a
facial challenge and, on summary judgment, the Tax Court decided
the issue in plaintiff's favor as a facial challenge.  It
follows, plaintiff reasons, that the Tax Court should have issued
a declaratory judgment of comparable scope.   For the reasons
that follow, we conclude that the Tax Court did not commit legal
error in entering the more limited judgment. 
	This court consistently has held that courts cannot
issue declaratory judgments in a vacuum; they must resolve an
actual or justiciable controversy.  See Mitchell Bros. Truck
Lines v. Lexington, 287 Or 217, 219, 598 P2d 294 (1979); Oregon
Medical Assn. v. Rawls, 276 Or 1101, 1107, 557 P2d 664 (1977);
and Hale v. Fireman's Fund Ins. Co. et al, 209 Or 99, 103, 302
P2d 1010 (1956) (all so stating).  To be justiciable, a
controversy must involve a dispute based on present facts rather
than on contingent or hypothetical events.  Brown v. Oregon State
Bar, 293 Or 446, 449, 648 P2d 1289 (1982); see also Drake v. City
of Portland, 172 Or 558, 599, 143 P2d 213 (1943) (courts will not
render declaratory judgment where plaintiff's rights are
contingent on event that no one can predict and that might never
occur).  
	As a result, declaratory relief is available "only when
it can affect in the present some rights between the parties[.]" 
Barcik v. Kubiaczyk, 321 Or 174, 188, 895 P2d 765 (1995)
(emphasis in original).  That tenet applies with particular force
when issues involve questions of constitutional importance.  In
those situations, we have cited with approval the United States
Supreme Court's policy of "'avoiding constitutional decisions
until the issues are presented with clarity, precision and
certainty,'" declining, in the process, to exercise jurisdiction
when "'prematurity and comparative abstractness,' or
'uncertainness'" would leave this court without a concrete basis
for a decision.  Rawls, 276 Or at 1107, quoting Rescue Army v.
Municipal Court, 331 US 549, 574-76, 67 S Ct 1409, 91 L Ed 2d
1666 (1947). 
	Plaintiff, however, argues that, under Brown, the
substance of a justiciable controversy can lie in the
interpretation of a statute and a determination of a state
officer's official duties thereunder, rather than an actual
application of a statute in a particular circumstance.  In Brown,
an agency that was conducting a contested case hearing requested
advice from the Attorney General's office.  Two assistant
attorneys general subsequently met in private with the agency's
director and a hearings officer and did not notify the opposing
litigants.  As a result of that meeting, the Oregon State Bar
(Bar) received an ethics complaint against the Attorney General
and issued an opinion that the meeting had violated several
provisions of the Code of Professional Responsibility.  
	The Attorney General subsequently brought an action
against the Bar seeking a declaratory judgment regarding the
Attorney General's authority under ORS 180.220 (5) to give private,
ex parte advice to agencies involved in contested cases.  The
trial court granted the Bar's motion for summary judgment based,
in part, on the ground that the Attorney General had failed to
present a justiciable controversy involving present facts.  This
court reversed that decision, stating:
	"The court is requested to consider a specific set of
facts -- whether plaintiff may give advice upon request
to agencies in contested cases where plaintiff's office
is not involved in the case, agency rules do not
prohibit the conduct and the recipient does not have
authority to issue binding orders.  The controversy
involves present facts, the plaintiff's existing
statutory duty.  * * *  The controversy does not
concern the specific conduct of having given advice to
the [agency director] but concerns the plaintiff's
continuing state-wide official conduct under the
statutes."
Brown, 293 Or at 450 (emphasis added).
		In Brown, this court concluded that the issue that the
plaintiff raised was justiciable because it called for the
interpretation of a statute and implicated a current dispute over
the plaintiff's compliance with statutory duties that were part
of his duties as Attorney General.  The court emphasized that
individuals assuming that office immediately become responsible
for those duties and that the dispute over the plaintiff's
fulfillment of his duties was not hypothetical or prospective. 
Brown, therefore, stands for the unremarkable proposition that,
when state officers seek judicial declarations regarding their
duties, the statutory responsibilities of their office provide
the present facts necessary for a justiciable controversy and,
when such a controversy is present, a court only has limited
discretion to decline to adjudicate it.  Nothing in Brown,
however, compels the conclusion that it was legal error for the
Tax Court to confine its judgment in this case to the actual
controversy between the parties.
		As Brown demonstrates, Oregon courts are accorded some
discretion in fashioning a judgment under the declaratory
judgment statute.  See id. at 451 (courts have some discretion in
granting declaratory judgments).  Historically, in declaratory
judgment cases involving the constitutionality of a statute, the
discretion accorded a court in its adjudicative function has been
guided, in part, by the view that courts should avoid making
"constitutional decisions until issues are presented with
clarity, precision and certainty[.]"  Rawls, 276 Or at 1107
(internal quotation marks and citation omitted).  The
underpinnings of that form of judicial restraint were expressed
by this court in Oregon Cry. Mfgs. Ass'n v. White, 159 Or 99,
109, 78 P2d 572 (1938), as follows:
		"Deciding hypothetical cases is not a judicial
function.  Neither can courts, in the absence of
constitutional authority, render advisory opinions.  A
declaratory judgment has the force and effect of an
adjudication.  Hence, to invoke this extraordinary
statutory relief there must be an actual controversy
existing between parties.  Particularly should this be
so when a court is asked to declare that a co-ordinate
branch of government has exceeded its power by passing
a statute in violation of the fundamental or basic law. 
No court should declare an act unconstitutional unless
it is necessary to do so."
(Emphasis added; citation omitted.)
		Here, with regard to pay-per-view events originating in
Oregon, plaintiff presented only a tentative -- and hence,
uncertain -- constitutional claim to the Tax Court.  Nothing in
the record indicated that plaintiff ever had broadcast a pay-per-view boxing or wrestling event from Oregon, made plans to do so,
or even considered such an enterprise.  Thus, it was unnecessary
in this case for the Tax Court to rule on the constitutionality
of the statute in that respect.  The fact that plaintiff labeled
and argued its claim as a facial challenge to the statute did not
prohibit the Tax Court from adjudicating only the more narrow and
actual constitutional controversy between the parties.  We hold
that the Tax Court did not err in limiting its judgment
accordingly.
Plaintiff also asserts that the Tax Court erred as a
matter of law by issuing a final judgment that was significantly
narrower than its summary judgment order.  Plaintiff contends
that the Tax Court's summary judgment ruling invalidated the tax 
with respect to both in-state and out-of-state telecasts, a
decision that the final judgment should have reflected.  However,
that assertion is not borne out in the text of the Tax Court's
summary judgment order.  As we noted above, the Tax Court
expressly predicated its order on the fact that plaintiff's
boxing matches all had originated outside Oregon, i.e., beyond
the state's regulatory jurisdiction.  To the extent that
plaintiff argues that an inconsistency exists between the Tax
Court's summary judgment order and its final judgment, that
argument is not correct. (6)
       	Finally, plaintiff also contends that the Tax Court
erred when it denied plaintiff's motion for attorney fees and
costs.  Plaintiff first reiterates its argument that defendants
acted without a reasonable basis in fact or in law.  ORS
182.090(1).  We disagree.  The fact that an agency's position on
a matter is legally incorrect does not make it unreasonable as a
matter of law.  McKean-Coffman v. Employment Div., 314 Or 645,
649-50, 842 P2d 380 (1992).  See also Market Transport v.
Maudlin, 301 Or 727, 742, 725 P2d 914 (1986) (where correct
application of law to the facts at hand was unclear, court could
not state that agency's order lacked reasonable basis in law or
fact).  
		In this case, plaintiff raised an issue of first
impression in this jurisdiction.  Although it is true that other
jurisdictions had addressed similar issues, those decisions were
not binding precedent in Oregon and, therefore, did not establish
that defendants acted unreasonably in the face of settled law. 
Moreover, in the course of enforcing the tax, defendants' relied
-- as they were entitled to do -- on the advice of the Attorney
General.  As this court noted in State ex rel. v. Mott, 163 Or
631, 640, 97 P2d 950 (1940):
	"Officers acting in good faith have a right to rely on
the opinion of the attorney general, as he is the
officer designated by law to render such service for
their guidance and protection."
If the law were otherwise, few administrators would care to
assume responsibility for rendering hard decisions in matters
like the one presented here.  Plaintiff has not demonstrated that
defendants' enforcement of the tax in this instance lacked a
reasonable basis in law or fact.
		Plaintiff also argues that the Tax Court erred when it
declined to exercise its inherent equitable authority to award
attorney fees.  Plaintiff points out that its action in this case
has vindicated important First Amendment rights for all
telecasters.  Although plaintiff acknowledges that the Tax
Court's decision has served plaintiff's own financial interests,
plaintiff argues that those interests are ones shared with all
affected telecasters and, therefore, not peculiar to itself.  In
plaintiff's view, that fact should trump the Tax Court's
conclusion under Armatta, 327 Or 250, that plaintiff's own self-interest nullified its claim to equitable fees and costs.  
		In Armatta, however, this court wrote:
	"Finally, in filing the action, the party requesting
attorney fees must have been seeking to 'vindicat[e] an
important constitutional right applying to all citizens
without any gain peculiar to himself,' as opposed to
vindicating 'individualized and different interests,'
or 'any pecuniary or other special interest of his own
aside from that shared with the public at large.'"
Id. at 287 (emphasis added; internal citations omitted).  In this
case, plaintiff and the assorted telecasters that it purports to
represent are not "all citizens"; neither is it likely that their
numbers would allow them to pass for a significant part of the
"public at large."  Plaintiff also has secured for itself a
special (and substantial) pecuniary interest not shared with the
general public.  See Dennehy v. Dept. of Rev., 308 Or 423, 427
781 P2d 346 (1993) (personal pecuniary interest disqualified
moving party from award of attorney fees under court's inherent
equitable authority to award attorney fees).  Under Armatta and
Dennehy, the Tax Court did not err in declining to award
equitable attorney fees and costs to plaintiff.
		The judgments of the Tax Court are affirmed.


1. ORS 463.113 created the Oregon State Boxing and
Wrestling Commission as part of the Department of State Police. 
As a result, the Superintendent of State Police plays various
roles in the functions of the commission including, among other
things, appointing the commission's five members.  See ORS
463.125 (so stating).

2. ORS 463.320(3) provides:
		"Any person licensed under this chapter who holds
the distribution rights of a closed circuit telecast of
a boxing or wrestling event that occurs within or
outside this state and who sells the rights to a cable
system operator in this state shall within 30 days
after the telecast event:
		"(a) File with the superintendent a written report
on a form provided by the superintendent.  The report
shall include the number of orders sold by the cable
system operator to its customers in this state and the
face value of those orders.
		"(b) Pay a tax equal to six percent of the face
value of the orders sold by the cable system operator
to its customers in this state.  The person shall pay
the tax by cashier's check or money order payable to
the department and attached to the report required
under paragraph (a) of this subsection."

3. ORS 182.090 provides:
		"(1) In any civil judicial proceeding involving as
adverse parties a state agency, as defined in ORS
291.002, and a petitioner, the court shall award the
petitioner reasonable attorney fees and reasonable
expenses if the court finds in favor of the petitioner
and also finds that the state agency acted without a
reasonable basis in fact or in law.
		"(2) Amounts allowed under this section for
reasonable attorney fees and expenses shall be paid
from funds available to the state agency. The court may
withhold all or part of the attorney fees from any
award to a petitioner if the court finds that the state
agency has proved that its action was substantially
justified or that special circumstances exist which
make the award of all or a portion of the attorney fees
unjust.
		"(3) As used in this section, 'civil judicial
proceeding' means any proceeding, other than a criminal
proceeding as defined in ORS 131.005(7), conducted
before a court of this state."


4. In Swett v. Bradbury, 335 Or 378, 389, 67 P3d 391
(2003), decided after the Tax Court issued its decision in this
case, this court concluded that the requirement that the
proceeding be one in equity was of "limited utility" in
determining whether to award attorney fees.

5. ORS 180.220 enumerates the powers and duties of the
Department of Justice, the agency headed by the Attorney General. 
Among them is the responsibility for all legal business of state
agencies requiring the services of an attorney.

6. Because we do not find plaintiff's factual predicate
for its argument to be well taken, we need not, and do not,
address the merits of plaintiff's legal theory that a trial
court's final judgment must mirror any interlocutory order
awarding summary judgment.