Title: General Motors Corp. v. Commonwealth, Aplt. (dissenting)

State: pennsylvania

Issuer: Pennsylvania Supreme Court

Document:

[J-9-2021][M.O. – Baer, C.J.] IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT GENERAL MOTORS CORPORATION, Appellee v. COMMONWEALTH OF PENNSYLVANIA, Appellant : : : : : : : : : : : : : No. 12 MAP 2020 Appeal from the Order of Commonwealth Court dated 1/30/20 at No. 869 FR 2012 granting the waiver of briefing and argument on exceptions and entering judgment of the 11/21/19 order that reversed and remanded the decision of the PA Board of Finance and Revenue at No. 1202690 dated 11/6/12 and exited 11/9/12 ARGUED: March 10, 2021 DISSENTING OPINION JUSTICE SAYLOR DECIDED: December 22, 2021 I respectfully dissent, since I agree with the Commonwealth’s position that Nextel Communications of the Mid-Atlantic, Inc. v. Department of Revenue, 642 Pa. 729, 171 A.3d 682 (2017), made a “fundamental break from precedent that litigants may have relied upon.” Brief for Appellant at 22 (quoting Passarello v. Grumbine, 624 Pa. 564, 602, 87 A.3d 285, 308 (2014)). In the first instance, in Dana Holding Corp. v. WCAB (Smuck), ___ Pa. ___, 232 A.3d 629 (2020), this Court recognized that the overturning of a presumptively valid statute “raise[s] the same concerns about reliance and vested rights [J-9-2021][M.O. – Baer, C.J.] - 2 that have animated the application of balancing tests to determine whether the effect of new rules should be limited to prospective application.” Id. at ___, 232 A.3d at 640.1 If this were not sufficient, Nextel explicitly disavowed the previous ruling in Commonwealth v. Warner Brothers Theatres, Inc., 345 Pa. 270, 27 A.2d 62 (1942), that a taxation scheme incorporating a cap on capital-loss deductions “does not violate the Uniformity provision of the Constitution,” because “[w]here the base is the same and the rate unvarying, there is no lack of uniformity.” Id. at 274, 27 A.2d at 64. As the Commonwealth highlights, the decisions referenced by the majority as ostensibly reflecting the Court’s “steadfast[] adhere[nce]” to the opposite proposition involved different questions of disparate tax rates. Majority Opinion, slip op. at 25-28.2 However, “[w]hether, in calculating the tax base, a deduction dollar cap violates uniformity was the issue in Commonwealth v. Warner Bros.” Brief for Appellant at 21 (emphasis in original). In terms of the reliance interest in maintaining a statutory cap on net-loss deductions, the Commonwealth can find very little comfort in the fact that Warner Brothers’ material and straightforward proclamation was expressed in relatively brief terms, see Majority Opinion, slip op. at 29 (relying on the fact that Warner Brothers “provided minimal discussion of the Uniformity Clause issue” to remove the decision from the calculus of determining whether Nextel reflects a new rule). Cf. American Trucking Associations, Inc. v. McNulty, 528 Pa. 212, 219, 596 A.2d 784, 787 (1991) (“Undeniably, 1 Although the Court in Dana Holding tended toward the modern federal approach of favoring retroactive application of judicial rulings invalidating statutes to similarly-situated litigants, we expressly recognized that tax-refund cases are treated differently. See id. at ___, 232 A.3d at 642, 647. 2 See Brief for Appellant at 21 (“[O]f course the Court was able to ‘ancho[r] its decision [to invalidate a state taxation statute] in precedent[,] . . . [b]ut surely that cannot be dispositive. Few decisions are so novel that there is no precedent to which they may be moored.” (quoting Harper v. Va. Dep’t of Taxation, 509 U.S. 86, 127-28, 113 S. Ct. 2510, 2534 (1993) (O’Connor, J., dissenting))). [J-9-2021][M.O. – Baer, C.J.] - 3 the General Assembly was justified in relying on the Aero Mayflower line of cases in considering the statutes enacted here to be constitutional.”). As such, I would implement the balancing assessment that is ordinarily applied in determining retroactive application of a new rule in the discrete setting of tax-refund cases, as manifested in Oz Gas, Ltd. v. Warren Area Sch. Dist., 595 Pa. 128, 938 A.2d 274 (2007). There, this Court ultimately pronounced the general rule that “a decision of this Court invalidating a tax statute takes effect as of the date of the decision and is not to be applied retroactively.” Id. at 146, 938 A.2d at 285; accord McNulty, 528 Pa. at 225, 596 A.2d at 791. Finally, based on my conclusion that Nextel reflects a new rule (and that the judicial overturning of a presumptively valid statute in the absence of on-point, clearly-settled law is sufficient to implicate a retroactivity assessment in any event), I respectfully differ with the majority’s conclusion that due process requires a refund. See generally Brief for Appellant at 13-14 (distinguishing McKesson Corp. v. Division of Alcoholic Beverages and Tobacco of Florida, 496 U.S. 18, 110 S. Ct. 2238 (1990), on the basis that the circumstances before the Supreme Court involved a state’s clear violation of settled law, and, for this reason, the state was obligated to provide relief consistent with that law).3 3 I also note that the majority’s present due process analysis, if applied in Nextel, would seem to require a different result in that matter. While the analysis in Nextel was centered on legislative intent relative to severance, see Nextel, 642 Pa. at 764-68, 171 A.3d at 703- 05, this Court generally presumes that the Legislature did not intend an unconstitutional result. See 1 Pa.C.S. §1922(3).